CRA caused the housing crash
By Honest Abe on Fri, Oct 16th, 2009 at 7:40 am | 4714 views | rss | email this | add commentYES, the “only” institutions which were regulated by CRA were large commercial banks, BUT that CREATED the DEMAND that small mortgage companies happily filled. CRA loans were bundled as securities and sold all around the world…but the starting point of the entire food chain was the government forcing commercial banks to make unwise loans.
What happens to prices when suddenly MILLIONS of people can now buy the same product? Thats right - bidding wars -and prices skyrocketed, didn’t they? With skyhigh prices many conventional borrowers chose Alt-A and Option Arm loans for the following reasons: (1) to get into the house, and (2) cope with skyhigh payments. Other’s with equity borrowed in order to buy commercial properties. The cancer spread and it all started with CRA, kinda like when you toss a pebble into a pond - the ripple effect. By some estimates all this housing activity accounted for more than 40% of ALL jobs in the U.S. since 2001. Its ALL inter-related.
CRA had nothing to do with housing bubbles in other countries, however all have similar CAUSES to our own collapse. Central government planing, high inflation, and central banks are the involved…and they too are 100% government related - gee what a coincidence. America also has central government planing (gov’t intervention), high inflation and The Fed, which create’s money out of thin air then loan’s it to the gov’t, at interest, putting us all in debt, $1.4 BILLION… PER DAY on INTREST payments alone.
Still not convinced that the Community Reinvestment Act is the cause of our housing and economic crash? Ask yourself this: If ALL loans made in the last 35 years required (1) 20% down, (2) a fixed interest rate, (3) prudent lending requirements and (4) no CRA…would we in America have our current economic meltdown? Abe.
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In order to qualify for CRA credits the loan had to be made w/in a “red-lined’ neighborhood. Show me a ‘red-lined’ neighborhood in Portland, Oregon, Las Vegas, NV, etc. More than half the subprime loans made in the past ten years were done so by private mortgage lenders NOT regulated by CRA.
Ask yourself this, how long has VA and FHA loans been around and to what degree do those loans partake in the market. These are practically zero down and allow for some not so great credit scores.
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Why wasn’t these a housing bubble in Selma and Cuba, Alabama? Wanna talk about poor… ( I chose these particular locations since I have relatives there)
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So what was the ‘reward’ for earning CRA credits???? How were the banks ‘FORCED’ to make bad loans. In the early years, what were the percentage that went bad?
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Honest–
That is just completely incorrect. The CRA only applied to very specific zip codes. And if you look at foreclosure rates in those zip codes, they mirror what would be expected during a recession.
Yes, lending practices were relaxed and, yes that directly caused the bubble. But, it happened completely independently of the CRA. It was because the crazy MBAs on Wall St. didn’t understand the risk of mortgage debt. And the ratings companies called all the crappy Alt-A, Option ARM, liar loans, etc. as AAA investment grade securities when they were bundled together.
We’ve hand government intervention in housing for many, many years. Fannie Mae and Freddie Mac have been around since the late 60s and the mortgage interest deduction has been available forever. This is nothing new. You may not agree with the goals of government intervention, but it certainly didn’t cause the bubble and subsequent crash
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Hey Abe, here’s a bunch of info with links so you can check sources:
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
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Seems like blaming the CRA is like blaming my great grandma for my frustrations with this country. Why the hell couldn’t she stay in Czechoslovakia? What was so great about the USA in 1900?!;O) The CRA was a great concept but has been destroyed by further legislative action though it alone is not to blame for this housing and credit bubble/crisis.
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“ALL loans made in the last 35 years required (1) 20% down, (2) a fixed interest rate, (3) prudent lending requirements and (4) no CRA…would we in America have our current economic meltdown? ”
Of course not. The point is 1, 2, and 3 had nothing to do with CRA, and your ‘pebble in the pond’ is just hand waving nonsense without explaining cause and effect.
I’m not sure what happened to the other thread. Vanished into the either. What’s to point of going to the trouble to post anything? I’m done here.
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Abe what are you talking about? Subprime, low income, and CRA are not synonyms. Many subprime mortgages were pretty high up on the income ladder. http://seekingalpha.com/article/49701-subprime-mortgages-crossing-income-and-credit-strata gives a pretty good read about this. How can CRA be the cause of the housing bubble in the US but have nothing to do with the housing bubble in the rest of the world? You are saying there were 2 independent simultanious housing bubbles (the USA and the rest of the world) created by entirely different causes. Really? That’s very interesting theory.
There is one and only one cause of the housing and economic crash everywhere in the world. The people who signed on the bottom line for houses they could not afford gambling they would cash in on the housing lottery. No one forced people to carry unaffordable mortgages with no savings in case of a downturn. Renting or buying a smaller more affordable house was always an option. I did and bitterly resent anyone or any irresponsible company being bailed out with my tax money. What happened to being responsible for your own actions?
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bob2356 says
Excellent post.
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bob2356 says
I also agree that this is an excellent post. Even though I am retired, I am forced by the state of California to pay absurd taxes every quarter. I know that even though I do not work, I am paying for the f***ing flakes who did not buy responsibly. I am their freaking bailout!!!!
Don’t even get me started on how I am forced to pay for the illegals…
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I understand the frustration with the individual loanowner but what the hell were the banks thinking lending so much money to folks who obviously couldn’t afford it?!?! Hey, I make 40K and support my family of four, would you as an individual loan me $400K? Hell NO! So why did the banks do it?
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I’ve read through this whole post, suggested attachments (Wikipedia), as well as other google postings on CRA. Here is my observations:
(1) Its pretty clear the feeding frenzy was started by CRA and the gov’t required lax lending requirements. Banks that had standards exceeding that of Regulators were considered to have “unfair lending practices.”
(2) CRA is a great concept BUT is unworkable in reality. It would also be great to let everyone fly around the country for almost nothing…but not so great if regulators forced the airlines to gut their safety standards. Do you see the similarity?
(3) Loans needing down payments, strict lending requirements and the like prevent run-a-way price increases (a bubble).
In other words CRA is the cause, devastation is the effect.
Millions of unsuspecting, innocent people like disgusted.again are paying the price for yet another government experiment gone horribly wrong.
Why is it that we continue to trust politicians, who are dumber and more messed up than we are, to control every aspect of our lives…usually with disastrous results (like CRA)? UGH.
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Elvis–
Could you explain how you came to the conclusion that
elvis says
I’ve read through the same articles and come to the exact opposite conclusion. Help me out. How does a loan in one of the CRA approved zip codes cause a bank to make a reckless loan in an affluent area? Regulators would only complain if they were not approving loans in the CRA approved zips–they wouldn’t have anything to say about loans in non-CRA zips. And non-CRA zips is where the bubble and crash occured.
elvis says
No. I don’t. I assume you’re implying that the CRA forced banks to give away money like an airline letting everyone fly for free. But that assumption is false. So the anala]ogy is poor.
elvis says
You’re right that down payments, strict lending requirements will prevent run-a-way price increases… but that has nothing to do with the CRA.
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The bubble and crash occurred everywhere. Lending standards were lowered across the board - in all areas - as a consequence of CRA. Here’s why, it wasn’t just “Regulated” banks which made loans to “meet the credit needs of local communities.” Mortgage companies did too, all over the place, since they were not regulated to stay in any particular zip code.
And you are right, CRA didn’t force banks to give away money, but did force them to lower their lending standards. The idea I tried to communicate was how dangerous it is if government forces any industry to lower their standards. For example, if the government forced the airline industry to lower their safety standards…it would have devastating consequences - wouldn’t you agree?
Finally, I agree with the original post above in paragraph two, that millions of new “bidders” pushed up prices in a bidding frenzy. You remember 2004, 2005 don’t you. Homes were selling for 5 - 7 - even 10% MORE than the asking price and that went on for years. It’s a direct connection…cause and effect…lower standards = higher prices.
Hope you all have a great weekend and remember its patriotic and good for our nation “to have a healthy distrust for government”
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Elvis–
You still haven’t made the connection between lowered lending standards and CRA. You say:
elvis says
How is that statement connected to CRA?? Mortgage companies DID lower their standards, but it had nothing to do with CRA. It had everything to do with the fact that there was a huge market for bundled mortgages. There was an insatiable appetite for them on Wall St., and as long as they could easily resell the mortgages for a large profit, the brokers were only too happy to write the crappy loans.
Finally–show me where the CRA states that banks must lower their lending standards…
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So why would a bank want to make a bad loan? I’m really not seeing the connection here.
Once again, what was the reward for making a loan to someone within a red lined neighborhood?
Giving so much blame to CRA and ignoring FHA/VA demonstrates significant ignorance. And how again did New Zealand and other countries get impacted by our CRA?
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Its not financially bad if they can sell that loan to someone else at an immediate profit then make another and sell, then another, etc.
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Fireballsocal says
When CRA was initiated that was not possible. Your statement can be made about the other 99.9% of the loans that were not CRA credits.
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CRA caused this too! http://www.katu.com/news/business/64613107.html
“NEW YORK (AP) - One of America’s wealthiest men was among six hedge fund managers and corporate executives arrested Friday in a hedge fund insider trading case that authorities say generated more than $25 million in illegal profits and was a wake-up call for Wall Street.
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Baseline Scenario has some great tutorials: http://baselinescenario.com/financial-crisis-for-beginners/
Keep reading and turn off the opinion pieces disguised as journalism.
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Here’s a great animated video on the Credit Crisis Situation:
http://www.youtube.com/watch?v=Q0zEXdDO5JU
Virtually free money in the form of near 1% interest rates created the bubble. It wasn’t just in real estate, but across the board in all kinds of consumer and government and private debt. Even the California Power Outage was caused, to a large degree by cheap money funding heavy arbitrage by Enron.
You don’t need the legislature to create a credit crisis, the market is capable of doing that all by itself. Florida in 1926.
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I should also add that CRA was passed in the 70s. What took so long?
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Securitization boom with mortgages being tossed into CDO/CDS blender, and the “Great Moderation” idiots like Greenspan, leading people to believe risk had evaporated and they could hire a Risk Manager for appearances and just put them in a basement office….. yeah you can see this is pretty simple really and actually repeats history. In the late 1920’s they had invented securitization then too and followed it off a cliff, but nobody wants to read about financial history it’s boring eh?
CRA conspiracy theorists will unshakeably believe what they want and there is no point in arguing with them IMO.
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Vicente says
Has anyone seen Honest Abe’s birth certificate? What is he hiding?
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Vicente says
That just interferes with all the babble about “financial innovation”, because you know…1929 was Then, and this is Now.
Obviously, people were too busy “saving the economy” to notice the parallels–or even care. Now we’re back to re-runs of “famous last words” from the 20s, as seen by Wall Street’s current gloat-fest.
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FYI, the Clinton Administration made changes to CRA which ultimately forced banks to issue $1 TRILLION in subprime loans. How did it force banks to do this? By introducing a federal requirement that banks either make the loans or face penelties. Bank examiners would use federal home loan data, broken down by neighborhood, income and race, to rate bank “performance.” In 1994, for example, Barack Hussain Obama sued Citibank on behalf of a client who claimed that the bank “systematically denied loans to African America applicants and others from minority neighborhoods.”
Even though Wikipedia states “the [CRA] law…does not require institutions to make high-risk loans” the reality of government pressure from regulators and a potential for a blizzard of lawsuits says otherwise. [BTW, all this information is on-line].
Ultimately, the very people the government sought to help, through “compassionate legislation” are the very same people who are hurt the most. The law of unintended consequences strikes again - it always does. Abe
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Yes Abe, Al Greenspan lowering interest rates to historic lows and telling regulators to stay in the donut shop means zip.
It’s the KONSPIRACY of libruls eh? The poor bankers were FORCED to drive off the cliff! A trillion dollars really? Based on….?
Your 1994 reference leads me to Snopes discrediting this particular Bankster-friendly Falsehood.
Snopes: Obama vs Citi
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“How did it force banks to do this?”
You want to add Andy Cuomo to that with his goverment affirmative action charges against Citi and several other banks.
Clinton’s HUD Secretary Andrew Cuomo … “$2.1B in mortgages otherwise not qualified. Higher risk and
higher defualt.. ” right out of his mouth…
http://www.youtube.com/watch?v=Lr1M1T2Y314
“Subprime lending started as a good idea.. distribute risk for … and get loans to people who otherwise were unable to..”
Obama 2007…
OMG, and they called Nixon a crook! makes Nixon look like chump change..
http://www.youtube.com/watch?v=Lr1M1T2Y314
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“In the late 1920’s they had invented securitization then too and followed it off a cliff, but nobody wants to read about financial history it’s boring eh? ”
Would have been very difficult since all corporations pre- SEC act of 33/34 whose stock was traded on the Wall Street
didnt even publish financial statements to the public ( or anyone else as a matter ).. not to mention financial statements
were made in different formats and different accouning standards applied. This also applied to private companies.
But for the public back in the 20s were all to happy to buy up and keep bidding up stock prices. It was pure speculation on stock appreciation without any knowledge what the actual revenue or earnings were on their ownership stake.
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“I should also add that CRA was passed in the 70s. What took so long?”
http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act#Controversy
Crucial to the passing of this Act was an amendment made to the GLBA, stating that no merger may go ahead if any of the financial holding institutions, or affiliates thereof, received a “less than satisfactory [sic] rating at its most recent CRA exam”, essentially meaning that any merger may only go ahead with the strict approval of the regulatory bodies responsible for the Community Reinvestment Act (CRA).[17] This was an issue of hot contention, and the Clinton Administration stressed that it “would veto any legislation that would scale back minority-lending requirements.” [18]
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The CRA Konspiracy also faked the moon landings, their reach is astounding.
Only slightly less astounding than SPIN attempts of people who turn Obama once serving as legal aid on a minor lawsuit that was SETTLED, into a decades long plan to wreck America. Those brown people are crafty eh bap33….. I mea Thomas…or abe….
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How can we find if particular house we were following has gone under contract or the agent just took it off the market? We were following one house in our neighbor and suddenly the house doesn’t show up at all in redfin / realtor.com. It doesn’t show anything like pending etc and not even come in search for any history data on redfin.
Pretty confusing,
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Let us just put this straight: Blaming CRA for the housing bubble is blatantly false.
The effort to do so is nothing but a massive propaganda campaign by the political right to try and confuse feeble-minded people with libertarian delusions of grandeur that the bubble was caused by “too much regulation”.
Yeah, right. And the pigs on Wall St might fly (out the window, with any luck).
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I can be found on here in many different places telling folks in the past that The Sodomite B. Frank, along with his boy friend at Fanny, (still makes me laugh to write that) was the beginnings of the end …. and the illegal and immoral CRA ofcourse ….. but, nothing can make it more obvious that we neo-conservo-right-wing-tea-bagger-AM radio-nut-jobs hit right on the truth-button better than the rantings found just above this post.
With Love,
Feeble Minded
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Leigh says
hmmmm, not sure … maybe a crack addicted single mother of 5 (each with a different daddy) that is a 6th generations-removed slave could explain how to retain that historical blaming ability you mention - maby the key is using hope-n-change?
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Many people in America are not aware that regulation IS the cause of bubbles, economic downturns, jobs moving off-shore, etc. Thats not a propaganda campaign - thats reality. The most efficient way to distribute anything is through a willing buyer and a willing seller [also known as The Free Market]. Period. When a third party (government) steps in and says “STOP - you can’t do that until you [fill in the blank].” Thats when any economic problem starts. When that interference is multiplied on a massive scale all kinds of negative unintended economic consequences occur.
As far as CRA…it is just as easy to find information, on-line, to support my claim about CRA as yours. Sarcastic remarks do nothing to support your point.
I will restate my position…GOVERNMENT caused the Housing crash and CRA was a major contributor, along with other government players like Fannie Mae, Freddie Mac, Barney Frank, The Fed, Alan Greenspan and others.
The game is always the same: (1) Government (in exchange for votes) tries to “help the deowntrodden” (2) The poor get something for nothing by putting the taxpayer at risk (3) The taxpayer gets it in the shorts when things go wrong - as they always do because government cannot allocate anything better than the free market. (4) Since that government program didn’t go as planned that is another justification for even more regulation.
This continues until the free market puts on the brakes, all by itself, to stop the insanity. [Like it just did with skyrocketing housing prices]. Then a period of correction occurs - called a recession. This is when the free market makes the necessary corrections to clean up all the previous mistakes made by…thats right, the Government. Then the process starts all over again.
The reason America is on the verge of total collapse is because of too much government internvention, by politicians who are dumber and more messed up than any of us, by militant unions, by predatory greedy lawyers, and by liberal thinking and the shredding of the law of the land - The Constitution. We’re in trouble, not because of too many conservative ideas and policies, we’re in trouble because of too many liberal ideas and policies.
I’m sure you will agree America was in GREAT SHAPE in the conservative 1950’s…and we’re totally messed up now, thanks to so much liberalsim. It’s pretty obvious - isn’t it? Any other questions? Abe.
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Honest Abe says
NAFTA & GATT were DE-REGULATION moves to help move all the middle-class jobs off-shore to increase corporate profits. Trying to cast it as LIBRULS TERK OUR JERBS eh? Up is down, good is bad, heads is tails, keep up the flood of propaganda about the BROWN PEOPLE THREAT from your multiple accounts Bap33!
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Vicente–
You had it right earlier. It’s no use arguing with these nutjobs. If they want to believe that the CRA is the cause of all of their ills, so be it. Obviously critical thinking is not among their strengths, so it’s no use wasting time and energy trying to explain the fallacies of their logic.
I think I’ll invest in Alcoa–tinfoil sales seem like they are poised to increase…
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Vicente says
Interesting. I heard Bob Brinker (”Money Talk”) praise Bill Clinton for being instrumental in getting NAFTA and GATT passed. Bob Brinker credited NAFTA and GATT as contributing to Bill Clinton’s balanced budget.
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CRA was a big nothing-burger. Period, end of story, and changing the subject when confronted with this just points out there is no THERE, there. You can’t admit for even a second that we DID IT TO OURSELVES. It’s always gotta be a Commie plot, gotta have some LIBRULS to blame never anyone else, just like flouride poisoning our water supply and our precious bodily fluids….
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Vicente says
Not changing the subject.
I just thought it ironic that you imply hat NAFTA/GATT was a “bad” thing done by Republicans, while someone else sees NAFTA/GATT as a “good” thing done by a Democrat.
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Heh. I actually read this whole thread so I’d at least know the “CRA argument”
Like somebody put a regulatory gun to the banker’s heads to drive the mort volume for their toxic MBS.
Or, that Greenspan “over-regulated” the money supply when he kicked the Fed rate into the gutter.
Take the under-regulated liquidity away, and the “free market” hyperbole will simmer down.
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Vincente, I’m guessing you are a liberal. You are attempting to race bait using the “brown person threat.” I guess that shows your ignorance because my wife is a “brown person” and that won’t work with me. Furthermore, jobs move off-shore due to massive overregulation, punitive taxation, militant unions and greedy lawyers. If you have ever owned a business or a company you would know this to be true.
Tatup70…tinfoil, nutjobs…is that the extent of your contribution?
I couldn’t help but notice an absence of comment about the government game plan of helping the downtrodden, in exchange for votes. Or what a free market is and how it (always) wroks. Or the fact that this once great nation is on the verge of collapse, not because of conservative ideals and principals, but because of failed liberal experiments for the past 40 + years.
I’m not going to throw stones back at you, however I am going to point out failed policies which got us to this sad state of affairs. May I suggest you at least log onto mwhodges.com and read unbiased information about government policies and the negative effect its having on all of us, our children and grandchildern. Seems kinda unfair, that children not even born will have to carry a financial burden created by our generation. I’d call that moral bankrupcy, what would you call it? Abe
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Vincente/Honest Abe
Honest Abe says: Many people in America are not aware that regulation IS the cause of bubbles, economic downturns, jobs moving off-shore, etc. NAFTA & GATT were DE-REGULATION moves to help move all the middle-class jobs off-shore to increase corporate profits. Trying to cast it as LIBRULS TERK OUR JERBS eh? Up is down, good is bad, heads is tails, keep up the flood of propaganda about the BROWN PEOPLE THREAT from your multiple accounts Bap33!
Clinton passed NAFTA and GRAMM-LEACH-BLILEY. The more you grow the more you understand that this isnt about REPUBLICAN versus DEMOCRAT. This isnt about LIBERAL versus CONSERVATIVE. This is about THE GOVERNMENT against THE PEOPLE OF THE UNITED STATES OF AMERICA Stop with your partisan antics and claims of liberalism destroying the world markets because a liberal president got us into this mess using conservative policies.
YES, NAFTA was written to allow American businesses the opportunity to compete in the global market place
YES, we have lost jobs because of NAFTA
But what if we had never passed NAFTA….would we sit idle while CHINA, or JAPAN lead the charge to increase the global market share of their businesses?
4X
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and yes
DEY TUK OUR JERBS!!!!!!….LOL…I love SOUTH PARK.
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Honest Abe says
No I’m not a “LIBRUL” except as defined by the current set of NeoCons. When I started voting, I voted for Reagan. I am a fiscal conservative unlike 90+% the morons who call themselves Republicans these days, who seem to just want control of the ship so they can hand out favors to THEIR friends & contractors instead of the other guys.
If you look back up-thread it was YOU as Abe or Tom or whatever, the one bringing up race. Here it was:
“hmmmm, not sure … maybe a crack addicted single mother of 5 (each with a different daddy) that is a 6th generations-removed slave could explain how to retain that historical blaming ability you mention - maby the key is using hope-n-change?”
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4X says
NAFTA was North America.
GATT was when the globalization monster was unleashed.
Here’s a good 1994 video that Patrick linked where it’s laid out:
James Goldsmith interview
Corporations have long fought to be “persons” before the law, and now they are actually “more equal” pigs thanks to Bankruptcy Act of 2005 revisions which give you as an individual LESS rights than them. Globalization is another facet of the simple fact that corporations as “persons” would be judged sociopaths, owing allegiance to no country, and no ethos beyond more for them and less for us.
It’s entirely irrelevant to me which administration got it passed actually. It could have been either one. Because government for decades now, is just the security guard working in the lobby. Endless struggle about getting the “right” security guard in the lobby does not change the CEO, and ultimately whoever it is they dance for the people that pay them. Until “Too Big To Fail” and globalization are unfashionable, it really doesn’t matter much who is in charge that is just window-dressing.
CRA was just window-dressing maybe a few billion here and there in “feel good” just like John Rockefeller handing out nickels and dimes to the peasants to keep them happy while they are otherwise being robbed of their future. The videos linked about talk about what, 2 Billion dollars for example that Citibank was expected to “spend” on mortgages to lesser candidates? What does this money represent for them? POCKET CHANGE! Especially with fractional reserve lending where they manufacture the “money” and with vast reductions in capital reserve requirements and loosened accounting principles they came out way ahead.
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Honest Abe says
You haven’t really discussed anything. You’ve posted a bunch of your opinoins and passed them off as if they are fact. Which they are not. The US is not on the verge of collapse. The CRA did not cuase the housing bubble. Liberal experiments did not cause the problems we are now experiencing. If you’d like to explain WHY you think the way you do, then I’ll be happy to refute your theories one by one. I have tried to explain why it is obvious that the CRA didn’t cause the housing crash in previous posts, but you are unwilling to listen to any point of view other than your own. So, I’m not sure how else to convince you… If/when you’d like to rationally discuss it, let me know.
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staynumz says
We’re creating… an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property. - President George W. Bush, October 2004.
SEKRET Socialists everywhere!
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The US Postal Service was established in 1775, and have had 234 years to get it right but its broke, and even though heavily subsidized, it still can’t compete with the private sector (FedEx and UPS).
Social Security was established in 1935, and have had 74 years to get it right but it too is broke.
Fannie Mae was established in 1938, and have had 71 years to get it right but it is broke. Together with Freddie Mac they have contributed to the worst economic collapse in 80 years.
The War on Poverty was started in 1964, $1 Trillion of our hard earned money is confiscated each year and transferred to “the poor”, with few results.
Medicare and Medicaid were established in 1965, and have had 44 years to get it right, but both are broke - yet now the government dares to mention them as models for all US health care.
AMTRAK was established in 1970, and have had 39 years to get it right, even though heavily unionized and subsidized, they continue to run at a loss!
This year, a trillion dollars was committed to the massive political payoff called the “Stimulus Bill” but shows little positive effects, has been used to increase the size of government and raise government salaries while the rest of America suffer economic hardships.
“Cash for Clunkers” created an 80% increase in cars purchased during the program…but the cars were produced by foreign competitors.
So with a perfect 100% failure rate and a record that proves that each and every “service” forced on Americans by our over-reaching government turns into a disaster, how can any informed American trust our government to run or even set policies for Americas health care needs???
Each of us has a personal responsibility to let others in on this brilliant track record before 2010, and then remove from office those who are voting to destroy our nations economic health and economic future. Thank you, thank you very much!
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elvis says
I’ll disagree. The Package Nazis have damaged items in shipment and getting UPS to pay damages even though I bought their “insurance”, was an 8 months battle in one case. They did their best to wear me down with pointless delays for lost forms or insufficient docs or some other BS. I’ve gone back to using USPS whenever possible. Do you spit on our Founders? Benjamin Franklin was first Postmaster General. Next you’ll be talking about burning the Constitution or a flag or something.
Joined: September 20th, 2007
Posts: 1
Comments: 162
It’s hard to grasp the implications, because people who spent years studying the housing bubble might not conclude its root cause was a devious socialist plot. In fact, residential RE was nothing but a boom to business and the liberal media until homeowners could not pay resetting morts. But that’s the way your typical lefty conspirator works–he suckers you in with loose lending and easy mortgages so his lefty banking friends can make billions off the commie derivatives market. Then, before you know it, the banks are so deeply awash in debt that their only hope is to usher in a new age of socialism (for them) by brainwashing homedebtor Americans to elect Wall Street’s very own euro-socialist candidate Obama, thus destroying the efficient free-market system
I know, it’s all so hard to believe, but trust me—this is what happened! There’s no limit to depraved socialist trickery.
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This new learning amazes me! CRA must have been a Commie idea that Jimmy Carter was ordered to install by his masters in Moscow. Thanks for beginning to pull the wool off my eyes. I see now that I was wrong, and how we’ve been duped by the Illuminati, and the Trilateral Commision, and all these others who have been laying the groundwork for many DECADES and just decided to spring the trap now…. because this was the planned date. And all those Republicans who worked in the middle there, they were just SEKRET socialist tools of the Konspiracy as well. Hmmm, I hate to say that about Reagan but it’s a logical consequence right as rain. Cheers!
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elvis says
Wow–so our military is a failure then?
And your opinion on whether programs are failures are just that. Opinions.
Joined: August 12th, 2009
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The US Postal Service was established in 1775, and have had 234 years to get it right but its broke, and even though heavily subsidized, it still can’t compete with the private sector (FedEx and UPS).
FedEx and UPS doesn’t have to deliver multiple to letters and magazines to every single mailbox or post office box in America every single day except Sunday, no matter how remote or what the volume is, letter or magazine or parcel. This is like comparing paying a security guard agency minimum wage during store hours to once in a while toss out a kid from a mall, versus having to pay for a 24-7 professional police force to handle a wide range of issues from traffic control to graffitti to homicide.
If FedEx and UPS had to service regular letters at every mailbox in the country, their expenses and thus prices would increase accordingly.
Joined: August 12th, 2009
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YES, NAFTA was written to allow American businesses the opportunity to compete in the global market place
No, it was written to allow US businesses to move to Mexico and have an opportunity to make goods at Mexican wages while charging American Prices. We did just fine without free trade from 1792-1972.
Many people in America are not aware that regulation IS the cause of bubbles, economic downturns, jobs moving off-shore, etc.
Right. Until the 20th Century and those pesky progressives from Teddy to FDR to Nixon… without the ERA, Child Labor Laws, HUD, AFDC, and the FDA and EPA… there were never any business cycles.
There weren’t any panics in the 19th Century!
Joined: September 30th, 2007
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“The US Postal Service was established in 1775, and have had 234 years to get it right but its broke, and even though heavily subsidized, it still can’t compete with the private sector (FedEx and UPS).”
yes, by the same standard we should consider the glorious US military a failure.
There’s that old saying about ’seeing the cost of everything but the value of nothing’, and I notice there’s a lot of folks around that seem to take the view that anything that can’t pay its own way is worthless, though I also notice they really do seem to cherry pick the items in the public sector and - as thunderlips noted, present them in the context of relative false equivalent comparisons that best support their point - that would be the most valuable if sold into private hands.
Joined: June 16th, 2007
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>>The US Postal Service was established in 1775, and have had 234 years to get it right but its broke, and even though heavily subsidized, it still can’t compete with the private sector (FedEx and UPS).
What utter bullshit. FedEx or UPS can NOT get a letter “any-to-any” across the country in 3 days for $0.44. Open your mouth again when FedEx solves this problem, and at a profit. In the meanwhile, hold your breath.
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elvis listed a few more .. give them a try?
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tatupu70 says
that’s just your opinion. and you are wrong - again.
Joined: September 21st, 2009
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VICENTE, It was bap33 who mentioned the crack mom and the issue of race…not me. But you, sir, are the race baiter, as demonstrated by your failed attempt to smear me as a raciest person. Your feeble attempt failed because you did not know I am married to a “brown person.”
TAPUPU, one simple comparison should convince even you that the liberal policies of the past 40 + years have been a series of costly failed experiements. Answer this: Was America a better place (more freedom, sound money, fewer taxes, less regulation, less inflation, low house prices, fewer stupid laws, etc) in the 1950’s or now - in our current liberal nightmare we find ourselves in? Honest Abe.
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justme says
Some people have never heard of the “Last Mile” problem in logistics
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@Honest Abe,
I enjoy and agree with your posts 99% of the time. An example of the 1% would be where you suggested I mentioned race in my post about historical guilt. I submit to you sir that there is no such mention in my post. Intentionaly. Good day.
Joined: September 23rd, 2009
Posts: 16
Comments: 409
BAP:
In response to your quote: “hmmmm, not sure … maybe a crack addicted single mother of 5 (each with a different daddy) that is a 6th generations-removed slave could explain how to retain that historical blaming ability you mention - maby the key is using hope-n-change?”
The mental enslavement and impoverished thoughts holding the black community back are a direct result of what occurred 40 years ago….you make it seem as if blacks had a fair shot at the American Dream in the 1960’s, 1970’s. It wasnt until corporations realized that they were excluding talent that could potentially increase revenues that they started embracing equal employment. A crack addicted mother that is 6 generations removed from slavery deserves our empathy yet NOT our sympathy. It was her choice, however, her children will suffer the ramifications of her choice. Hopefully, those children will latch on to HOPE and CHANGE in order to turn around their lives. Lets all hope that these children show the extreme levels of resiliency it takes to break the cycle of poverty and reverse the history of discrimination the black community has faced for the past 400 years.
Here is your answer. When people go without basic necessities and hear talk of the American Dream, envy kicks in and they look for someone to blame for their not being able to achieve that same dream. When the realization kicks in that you are not living the lgood life everyone else is we all have a choice:
1. Show Resiliency - Work toward accomplishing that dream through education, skill building, self improvement
2. Reject Success/Pop Culture - Fall into the trap of blaming others, envy, frustration, anger, and disconnect from popular society.
You should be ashamed of your comments here, they show no remorse for America’s past which is riddled with discrimination and hatred against a people whose history is filled with achievement. Today, Africans come to America free of the enslaved thoughts and just like the Irish, Italians of the early 1900’s they achieve success because they have no realization of a past that ever held them back.
I encourage you to understand the true history of this nation, built on the free labor of the past.
Joined: September 23rd, 2009
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Kurt S: It’s hard to grasp the implications, because people who spent years studying the housing bubble might not conclude its root cause was a devious socialist plot. In fact, residential RE was nothing but a boom to business and the liberal media until homeowners could not pay resetting morts. But that’s the way your typical lefty conspirator works–he suckers you in with loose lending and easy mortgages so his lefty banking friends can make billions off the commie derivatives market. Then, before you know it, the banks are so deeply awash in debt that their only hope is to usher in a new age of socialism (for them) by brainwashing homedebtor Americans to elect Wall Street’s very own euro-socialist candidate Obama, thus destroying the efficient free-market system. I know, it’s all so hard to believe, but trust me—this is what happened! There’s no limit to depraved socialist trickery.
Are you calling George Bush Sr. a socialist? He drafted Gramm-Leach-Bliley in response to the S&L Crisis of 1989, Clinton signed it in 1992.
Thunderlips: YES, NAFTA was written to allow American businesses the opportunity to compete in the global market place. No, it was written to allow US businesses to move to Mexico and have an opportunity to make goods at Mexican wages while charging American Prices. We did just fine without free trade from 1792-1972.
So free trade stopped in 1972, explain?…I need to read up on this.
Many people in America are not aware that regulation IS the cause of bubbles, economic downturns, jobs moving off-shore, etc. Right. Until the 20th Century and those pesky progressives from Teddy to FDR to Nixon… without the ERA, Child Labor Laws, HUD, AFDC, and the FDA and EPA… there were never any business cycles. There weren’t any panics in the 19th Century!
There also wasnt any stock market or large corporations right?
Joined: September 21st, 2009
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BAP - I stand corrected. I want my rating to be 100%
Joined: September 23rd, 2009
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Staynumz: Wow, the leftist really got in a tizzy in this thread. I know it hurts when your leader and your party let you down. And you must be smarting with what owebama has done. But come on, call a spade a spade. CRA was a leftist idea. Do you honestly think it is a good idea to assist people that cant afford a house to “buy” one?
Sounds like you are a bit tiffed about the anti-bush sentiment going around. Obama is only making his first attempts at repairing the mistakes of the last 8 years. Yes, it is a good idea to assist people with buying a home…just not a home that is unaffordable with their income/debt ratio. All expenses need to be considered prior to lending anyone a home. First Obama, has not put our country at risk by engaging in new wartime efforts. Even if he is not making decisions that I consider impactful, I know he is making sound judgements in pursuit of improving the US economy, healthcare, and military efforts. 25% of the federal budget goes to the Military efforts so if you think it is better to invest more in WAR than HEALTHCARE just try getting really sick, go bankrupt and then give us your opinion on your death bed when your family is suffering the consequences of your choices. Everyone is 1 major illness away from bankruptcy, we must do something for the American People now that we have save the American Businesses.
…trust me on this one your not prepared to debate with a true progressive and supporter of Obama. You can bully others with banter, but lets use the facts here:
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@4X,
#1) If you can find a race mentioned in my post, reveal it. All you have done is prove yurself a racist. Your smart assed hammer swinging does not impress me.
#2) my post was in response to a specific post and you refuse to read it in context .. big suprize. The point being historical guilt / blame … but, actually reading what is in front of you does not seem to be your thing. You should be ashamed.
#3) what percentage “black” or “African” (both your words, not mine) must a person be to be able to call themselves black? must they look negro? must they have dark skin? surly you have a ruler you can point us to so we can be enlightened.
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4X said, “Yes, it is a good idea to assist people with buying a home…”
Bap33 says, “Prove it.”
Joined: September 23rd, 2009
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@BAP,
#1) If you can find a race mentioned in my post, reveal it. All you have done is prove yurself a racist. Your smart assed hammer swinging does not impress me.
When you speak of slaves in America, you speak of Black Americans. You surely were not speaking of slavery in the Congo where the fighting between the Hutu and Tutsi which has resulted in enslavement.
#2) my post was in response to a specific post and you refuse to read it in context .. big suprize. The point being historical guilt / blame … but, actually reading what is in front of you does not seem to be your thing. You should be ashamed.
When you speak of asking a crack mom with 6 kids “how to use the blame game” then you show ignorance of why people blame and also attempt to paint the picture of a certain demographic of people as being disfunctional. Your underlying message was clear, I understood your point being that we need to speak with someone who blames others for their misfortune. However, your approach was off track and showed poor taste. Shame on you for showing no remorse for any 6th generation children of slaves, they need our empathy and good will. Imagine if someone had of kicked you until you were down for 400 years and then all of sudden released your shackles, sent you on your way with no education or understanding of how society works. Some Black Americans are in the infancy stages of assimilating into American culture where as others are fully integrated into achieving the American Dream. Shame on you for your superiority complex.
#3) what percentage “black” or “African” (both your words, not mine) must a person be to be able to call themselves black? must they look negro? must they have dark skin? surly you have a ruler you can point us to so we can be enlightened.
Black describes descendants of the African Slaves that came here 400 years ago. African describes those who currently reside in Africa, including the South Afrikan whites.
I would love to continue this battle of wits with you, but you have obviously come unprepared.
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1) you can not find race, or America, or anything else you mention in my post. You are a thug racist.
2) you’re rediculous
3) you refuse to answer. why? I want to see/read/experience the ruler you use oh great and mighty know-it-all.
Joined: September 23rd, 2009
Posts: 16
Comments: 409
@BAP
1) you can not find race, or America, or anything else you mention in my post. You are a thug racist.
2) you’re rediculous
3) you refuse to answer. why? I want to see/read/experience the ruler you use oh great and mighty know-it-all.
Well, your not being able to complete a sentence using proper English leads me to believe that a 3rd grade education is not going to get you far in this debate. How do you spell ridiculous again? So, let me get this right, your referring to a “crack addicted single mother of 5 (each with a different daddy) that is a 6th generations-removed slave ” does not insinuate or lead us to believe you are speaking of a African American Woman who is on crack?
Ohh, I know…BAP stands for Black American Princess. Your African American and were only referring to yourself.
Geez…I feel like I am debating myself here.
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Honest Abe says
More freedom? Rosa Parks disagrees.
During the 1950’s the top tax brackets were over 90%. I think your history book has a misprint if it describes 1950 America as a nearly tax-free utopia. Similarly corporate taxes would be considered RUINOUSLY high by post-1980 standards and yet American business thrived. Sound money went out the door with gold & silver standards which is much further back.
Here’s one link to historic tax info:
Top US Marginal Income Tax Rates
The one true statement above is that inflation was nearly non-existent during 1950’s but the private banker cartel known as the Federal Reserve view this as a FAILURE of their inflationary policies. The modus operandi of bankers is to inflate the money supply to rob the middle class, but they prefer to do it at a steady and predictable rate. You have to boil the frog very slowly. When they fail, they never utter the word “deflation” even if it’s present like now, they say “inflation is negative” because the other word cannot be spoken. It baffles me why people accept this as normal without questioning why inflation is supposed to be the natural order, or whether it’s good for the nation and the economy.
Joined: June 16th, 2007
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Tonight on PBS Frontline there was a highly informative program with the title “The Warning”,
http://www.pbs.org/wgbh/pages/frontline/warning/
The program explains how CFTC chairwoman Brooksley Born in 1997 tried to regulate the over-the-counter (OTC) financial derivatives market but was viciously suppressed by the troika of Greenspan, Rubin and Summers plus Arthur Levitt (SEC). Greenspan even went so far as saying that even *fraud* should not be regulated, because “the market would take care of it”.
The next year (1998), the failure of the LTCM hedge fund demonstrated exactly what Born had predicted was due to lack of OTC regulation. A large portion of 1.6B of the 4.6B total losses were attributable to OTC derivatives.
Greenspan convinced Congress that LTCM was just an “anomaly of the markets”. or a “Black Swan” as we call it today (Greenspan later admitted his mistaken belief in the free markets during 2008-10-23 congressional testimony, in the aftermath of the Lehman crisis.)
Congress then passed the Gramm-Leach-Bliley Act (GLBA) in 1999, forbidding the CFTC from regulating OTC financial swaps (spare me the crap about Clinton being president at the time, please).
And the rest, from 1999-2009, is history.
If we do not soon get our act together and regulate harshly, I’m afraid that same history will soon repeat itself. So enough with the nonsense about CRA, and get cracking on where the real problems are.
Also look up GLBA, Greenspan, and Born on Wikipedia for more details. And no, I won’t take any shit about how Wikipedia is LIBRUL and therefore must be wrong. That is not a valid argument against the truth.
Joined: September 22nd, 2009
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Honest Abe says
OK–so let’s go through your assumptions and try to see how true they are. I know you prefer not to let the truth interfere with your posts…
http://en.wikipedia.org/wiki/File:MarginalIncomeTax.svg
Looking at the chart, certainly appears that taxes were much higher back in the 50’s, doesn’t it?
Not sure how you quantify more “freedom” or “fewer stupid laws”. I’ll agree that the Patriot Act has reduced our freedom some, but the strides made in gaining equality for everyone has probably more than offset for it. Stupid laws exist in every decade. House prices are higher now–mostly due to inflation, but partly due to the housing bubble. That’s a temporary situation, however, as everyone is learning these days. Finally, the last 2.5 decades (since Reagan) have been a non-ending orgy of de-regulation. So, for you to suggest that we are MORE regulated than in the 50’s is pure folly.
Just our of curiousity, what are these policies of the past 40+ years that have been so costly?? And please don’t mention the CRA. Hopefully, you’ve realized that it had very little to zero effect on the housing bubble by now.
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4X, if you somehow have a mental glitch that equates drug use and single parenting to Americans that look like Negro’s, that is your personal problem. You are a thug racist.
@justme,
that is good information you share, but in my opinion the “idea” to grant access to homeloanership to people that do not make the cut based on their own income and ability to repay the note — all on there own — was a very bad idea, and allowed this mess to get going. We both have said “perfect storm” in the past, and it hold true still.
@Honest Abe,
You are a great American, and your voice and opinion needs to spread like wildfire to save this land. Thank you.
Joined: September 22nd, 2009
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Bap33 says
I think there is a misconception out there about what the CRA actually was(and is). Here is what the Fed says:
“The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound operations. It was enacted by the Congress in 1977 (12 U.S.C. 2901) and is implemented by Regulation BB (12 CFR 228). The regulation was substantially revised in May 1995, and was most recently amended in August 2005.
Evaluation of CRA Performance
The CRA requires that each 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.
Neither the CRA nor its implementing regulation gives specific criteria for rating the performance of depository institutions. Rather, the law indicates that the evaluation process should accommodate an institution’s individual circumstances. Nor does the law require institutions to make high-risk loans that jeopardize their safety. To the contrary, the law makes it clear that an institution’s CRA activities should be undertaken in a safe and sound manner.
CRA examinations are conducted by the federal agencies that are responsible for supervising depository institutions. Information on this page is related to depository institutions that are examined by the Federal Reserve, mainly state-chartered banks that are members of the Federal Reserve. CRA information on other depository institutions is available from the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS). Interagency information about the CRA is available from the Federal Financial Institutions Examination Council (FFIEC).”
It specifically mentions on multiple occasions that it is not designed to encourage risky loans. “CRA activities should be undertaken in a safe and sound manner” If banks chose to make crappy decisions, it was their own doing. And now they are just trying to pass the blame for their ineptness.
Joined: August 12th, 2009
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So free trade stopped in 1972, explain?…I need to read up on this.
Hi 4X, I’m trying to say we did not have Free Trade until the 70s, but we did fine. We had 20%+ average tariffs from the time of George Washington to around Nixon’s Day. In fact, between 1950 and 1970, we had the greatest increase in the standard of living for the average American, despite having a significant tariffs on foreign imports and a world with greater trade restrictions on our products.
Joined: May 7th, 2007
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Yes indeed as “justme” posted, watch this:
Frontline: The Warning
Wall Street & toady nutjobs like Greenspan, were the NAVIGATORS, giving the directions that drove us off the cliff. Politicians are just the idiot driver following bad directions. It should be obvious to anyone after GM got a drubbing by Congress when they came hat in hand, yet when banks held a gun to all our heads, they meekly handed over a blank check.
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… and Barry Ritholtz has some commentary on the Born/Frontline program:
http://www.ritholtz.com/blog/2009/10/brooksley-born-on-pbs-frontline-tonight-talking-about-the-financial-crisis/
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@tatopu,
WOuld you agree that this is another case of “great intentions” gone bad? And in that doc the verbage suggests that banking is “local”, IE - local communities — that is not realistic. Also, why were banks taken to court, or threatened with action by folks like Barry and B.Frank and ACORN?? Was it not to force (bad) loans? If you say no, I’ll be forced to go gather those dang links, so please just agree. lol
Joined: September 20th, 2007
Posts: 1
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Vicente says
Yeah…given all the “cheap gas” by the Fed, banks put the “pedal to the floor” on mortgage volume. All they cared about was “speed”; the risk of cliff-diving was bundled and sold off to investors. Sheer mort volume and decoupled risk were done simply for profit, as ample documentation suggests. Redlining played little if any role in “prime” bubble RE markets–and nobody forced the banks to make money by dubious means–and eventually drive off that cliff. The notion that markets cannot destroy themselves is false; they are no more perfect than Humanity. History shows how markets often hang themselves by their own rope–I feel like Obvious Man stating this. 1929 is but one example.
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You keep acting like CRA means beans and thus is worth sensible people spending a lot of effort dissecting. It’s as if in the World Trade Center lobby early morning September 11th 2001 there had been a mugging, that would be FASCINATING and the MOST IMPORTANT EVENT of that day at that location.
A few lawsuits here and there for some small sums, no regulatory actions of note, no obvious data of any sort that CRA was the key difference that cost us umpty TRILLIONS of dollars. AFAICT the CRA might have had some small impact in subprime, but our economic problems went FAR FAR beyond subprime into all kinds of mortgages, securities, and derivatives-squared, and just outright fraud. Yet you are totally obsessed by it, as if that mugger made the planes crash into the Towers. You haven’t made your case very well and now you want others to prove you wrong. Good luck with that.
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umm … more like the politico folks that did not allow the CIA and FBI to collaberate the evidence of the planning hi-jackers as reported by the flight school .. blamming the politicos (klinton group) is what I would do, blaming the flight attendant for teaching them to fly is what some would do. Others on here would blame the people that built the cranes that were used to help build the Twin Towers.
I do agree Vincent, CRA was sub-prime specific (NINJA). And we agree that flooding the bottom with free money resulted in over-night specuvestors that knew how to play money and did the exotic poop to sucker in more bottom buyers as well as free-up bubble-equity for middle income folks (Alt A, HELOC, ect).
The fact that the gov has nursed the banks that should be allowed to die, created “buyer incentives”(currently $8K) for non-buyers, changed loan intrest rates to intice upside down loanowners, all on the backs of tomorrows taxpayers - and still the market is resetting - should result in the friggin gov staying out of RE lending all together.
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Bap33 says
No, I wouldn’t agree. Please post some links. I’m anxiously awaiting them!
The reports I’ve seen suggest that CRA had very little effect on anything, but any affect it did have was likely positive.
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Bap33 says
I’d agree with the tax credit being undesirable distortion. Otherwise, the idea CRA was the first hit of heroin and after that bankers were just zombie junkies unable to think for themselves simply doesn’t wash. They knew exactly what they were doing. Run up a bubble, then take the money and run.
For the record “flight attendants” seem unlikely to be teaching anyone to fly a plane.
Cheers!
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justme says
That was a great program. I really enjoyed Frontline’s Madoff program.
I knew that Obama wasn’t going to fix a dang thing the moment he announced Summers was joining the Administration.
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heck .. I meant flight instructors .. lol … dang it.
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tatupu70 says
Here is the proof of Barry and Barney and ACRON forcing banks to do bad loans:
search #1: “fannie mae and freddie mac barney frank”
result #1: http://www.google.com/search?hl=en&rls=com.microsoft:en-us:IE-SearchBox&rlz=1I7ADBF_en&q=fannie+mae+and+freddie+mac+barney+frank&revid=2032497490&ei=d23fSqKqD5LqsQPc6a3mDw&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=1&ved=0CCAQ1QIoAA
search #2: “acorn sues bank”
result #2: http://www.google.com/search?q=acorn+sues+bank&rls=com.microsoft:en-us:IE-SearchBox&ie=UTF-8&oe=UTF-8&sourceid=ie7&rlz=1I7ADBF_en
I did it that way to avoid the “you pick and choose” arguement that follows. Happy reading.
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one more .. for the CRA defenders : http://pajamasmedia.com/blog/why-did-bank-of-america-pay-acorn/
total time spend researching, 2 minutes. I had to answer the phone between posts. lol
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Bap33 says
Bap–
A google search doesn’t really prove anything. If you want to prove something, please post a link to a reputable article showing instances of banks being forced to make bad loans against their will.
By your logic, the following is proof that the world will end in 2012:
http://search.yahoo.com/search;_ylt=A0geu6v_b99KIFABFF1XNyoA?p=ending+of+world+2012&fr2=sb-top&fr=yfp-t-701&sao=1
Or that George W. Bush is actually a monkey:
http://search.yahoo.com/search;_ylt=A0geu5MOcN9Kn8wA5atXNyoA?p=George+Bush+is+monkey&fr2=sb-top&fr=yfp-t-701&sao=1
Or that Israel caused 9/11:
http://search.yahoo.com/search;_ylt=A0geutgycN9K_z0A1NpXNyoA?p=Israel+caused+9%2F11&fr2=sb-top&fr=yfp-t-701&sao=2
Obviously, none of that is true, but you can get a google or yahoo search to tell you whatever you want it to. There are enough nutjobs out there with blogs…
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And pajamas TV doesn’t count as a reputable source..
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@BAP33
You cant even remember your own ignorant statements, I quote you as a racist stating ““crack addicted single mother of 5 (each with a different daddy) that is a 6th generations-removed slave ” So we are to believe a “6th generations-removed slave” was not meant to refer to a Black American?
I get it…you were referring to Chinese slaves or Anglo-Germanic slaves that were brought to this country on slave ships in the 1600’s?
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@tatupu70
BAP33 doesnt use logic, only rhetoric to prove herself right. She is a Black American Princess that is 33 years old and likes to refer to other African Americans as “Slaves” and “Crack Moms”.
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the search option was so you could choose any one of many examples and avoid doing EXACTLY what you did with the pajama story.. see how that worked? Now go back and read a few of the hits on each search.
4X, please leave me out of your racist attacks.
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“Congress then passed the Gramm-Leach-Bliley Act (GLBA) in 1999, forbidding the CFTC from regulating OTC financial swaps (spare me the crap about Clinton being president at the time, please).”
OTC financial swaps in what? in what ‘assets’ did the OTC swaps invest in … was it highly graded S&P mortgages back securities ?
Ask Barney Franks if there is a Real Estate bubble which will implode like the Tech Bubble and he answers back …
Barney Frank in 2005: What Housing Bubble?
http://www.youtube.com/watch?v=iW5qKYfqALE
Clearly Franks thinks prices were sustainable, if not fundamental justified , and therefore any OTC swaps were clearly not a concern because a housing bubble did not exist and any implosion in prices just wasn’t going to happen.
Certainly in 2001-03 the warning of systemic risk to economy was openly discussed but it was stone walled by Congress!
http://www.youtube.com/watch?v=cMnSp4qEXNM&NR=1
Anyone catch this one… Seems no one was interested in the Accounting Fraud, over paid CEOs, and risks to economy.
http://www.youtube.com/watch?v=_MGT_cSi7Rs&feature=related
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Overall, Franks still talks about the credit crunch and wall street as the cause of home price drops.
No doubt, Franks must believe once you provide more funding, prices can go up. Would anyone be surprised about that?
Sure Franks and Company like to regulate the evil banks and wall street, but hell over high water do they want to regulate risky government backed entities. The CRA was just another Government backed program for social engineering.
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Bap33 says
So, what you’re saying is that you couldn’t find any reputable links for me, so instead you posted a link to a google search with 10 crappy links. In your mind, if there are 10 wackos out there writing it, then it must be true?
Still waiting…
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@tatupu,
welp …. you are the suggesting I pin-point a “reputable source”. You are the only one that knows what sources you find reputable. Please name me your top three “reputable sources”, and I’ll see if they even covered any part of these stories, and if they did I’ll get you the exact link vs. you having to read anything or click a “next page” arrow.
Your next step is to list your three top reputable choices.
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How about something without the word pajamas in the title? We can start there. I’m really not that picky–just something from an actual news organization and not a blogger. I’ll give you an example here:
http://www.bis.org/publ/work259.pdf?noframes=1
I’ll encourage you to read this. It’s very interesting.
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Vicente says
Justme and Vincente, I watched the tail end of this Frontline report last night. Really eye-opening stuff. I had a good idea already that Greenspan et al were ‘free marketers’ who navigated the Pols off the cliff, i.e. their guidance was a big reason for the bubbles (including Internet bubble) and subsequent crash(es). The specifics of Ms. Born and her warning was news to me however. A true American Patriot.
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The Community Reinvestment Act (CRA) is a US Federal law designed to encourage commercial banks and savings associations to meet the needs of low income borrowers. In other words bank were, in essence, forced to make loans to non-qualified borrowers. The benevolent US government pushed the risk of doing so onto unsuspecting taxpayers (Thanks Uncle Sam). Very few positive things in life are derived through force or forcing risk onto others.
I know a lot of you “intellectuals” out there are just going nuts. So be it, if so you are part of the problem here in America. You may be part of the “entitlement” crowd, or those who say “give-me, give-me, give-me,” those who want something for nothing. Those who think its okay to FORCE others to act in a way that pleases YOU. Those are the “takers” of the world. The rights haters and freedom destroyers, the big government proponents. Those out there that think government safety nets should not be limited, but in UN-LIMITED.The liberal thinkers who want to constantly experiment with the economy, with no money of their own at risk - but putting others at financial risk. NO THANK YOU.
Whats far better than “fuzzy thinking” is freedom and liberty for all. Things that drive liberals crazy; like facts, the rule of law, The Constitution, etc. Why is it I never hear a liberal quote the Constitution????
We do need government, but that government needs to be limited in size and scope. Government is the institutionalization of force…that’s one main reason government needs to be limited…not to run every one’s life.
Thank you, thank you very much.
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elvis says
Ummmm, not exactly. I’ll post it again to refresh your memory.
tatupu70 says
Nice try though–I like the theory that it’s the smart people that are ruining the country. I know I’d feel better with Homer Simpson in charge. Oh wait, we just voted him out of office, didn’t we?
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Tatupu - I’d like to say my description of CRA is ‘close enough’ for Government work - haha.
And right on - you’d LIKE to think smart people are running the country…but as you say, its a “theory”. Yes, Homer is gone but so many more need replacing. RE-ELECT NO ONE.
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Honest Abe says
I don’t necessarily disagree with that one… If only I thought there was anyone better waiting in the wings…
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Just for you tatupu:
http://spectator.org/archives/2009/02/06/the-true-origins-of-this-finan
http://www.businessandmedia.org/articles/2008/20080924145932.aspx
http://online.wsj.com/article/SB122212948811465427.html
we pause for some excellant quotes contained in and properly accredited in these links:
“An additional 4.5 million were guaranteed by the FHA and sold through Ginnie Mae before 2008, and a further 2.5 million loans were made under the rubric of the Community Reinvestment Act (CRA), which required insured banks to provide mortgage credit to home buyers who were at or below 80% of median income. Thus, almost two-thirds of all the bad mortgages in our financial system, many of which are now defaulting at unprecedented rates, were bought by government agencies or required by government regulations. ”
“In analyzing the mortgage crisis, economist Walter E. Williams has written: “Starting with the Community Reinvestment Act of 1977, that was given more teeth during the Clinton administration, Congress started intimidating banks and other financial institutions into making loans, so-called sub-prime loans, to high-risk homebuyers and businesses.”
http://online.wsj.com/article/SB10001424052748704107204574475110152189446.html
http://www.cnsnews.com/news/article/49791
http://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html?sec=&spon=&pagewanted=1
ok, last one: “The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to “meet the credit needs” of “low-income, minority, and distressed neighborhoods.” Lenders responded by loosening their underwriting standards and making increasingly shoddy loans. The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this “subprime” lending by authorizing ever more “flexible” criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.” — Boston Globe
http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/09/28/franks_fingerprints_are_all_over_the_financial_fiasco/
Welp, happy spinning. lol
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Bap–
Very good. I would consider those reputable sources. I think that they are wrong, but none of the links have sleepwear in their name.
Here’s some others for you to read:
http://www.federalreserve.gov/newsevents/speech/kroszner20081203a.htm
With an interesting section I copied below:
“Putting together these facts provides a striking result: Only 6 percent of all the higher-priced loans were extended by CRA-covered lenders to lower-income borrowers or neighborhoods in their CRA assessment areas, the local geographies that are the primary focus for CRA evaluation purposes. This result undermines the assertion by critics of the potential for a substantial role for the CRA in the subprime crisis. In other words, the very small share of all higher-priced loan originations that can reasonably be attributed to the CRA makes it hard to imagine how this law could have contributed in any meaningful way to the current subprime crisis”
“…Putting together these facts provides a striking result: Only 6 percent of all the higher-priced loans were extended by CRA-covered lenders to lower-income borrowers or neighborhoods in their CRA assessment areas, the local geographies that are the primary focus for CRA evaluation purposes. This result undermines the assertion by critics of the potential for a substantial role for the CRA in the subprime crisis. In other words, the very small share of all higher-priced loan originations that can reasonably be attributed to the CRA makes it hard to imagine how this law could have contributed in any meaningful way to the current subprime crisis”
“…When we conducted this analysis, we found essentially no difference in the performance of subprime loans in Zip codes that were just below or just above the income threshold for the CRA.9 The results of this analysis are not consistent with the contention that the CRA is at the root of the subprime crisis, because delinquency rates for subprime and alt-A loans in neighborhoods just below the CRA-eligibility threshold are very similar to delinquency rates on loans just above the threshold, hence not the subject of CRA lending”
“The final analysis we undertook to investigate the likely effects of the CRA on the subprime crisis was to examine foreclosure activity across neighborhoods grouped by income. We found that most foreclosure filings have taken place in middle- or higher-income neighborhoods; in fact, foreclosure filings have increased at a faster pace in middle- or higher-income areas than in lower-income areas that are the focus of the CRA.”
Or another one
http://www.businessweek.com/investing/insights/blog/archives/2008/09/community_reinv.html
“University of Michigan law professor Michael Barr testified back in February before the House Committee on Financial Services that 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision and another 30% were made by affiliates of banks or thrifts which are not subject to routine supervision or examinations”
“It’s telling that, amid all the recent recriminations, even lenders have not fingered CRA. That’s because CRA didn’t bring about the reckless lending at the heart of the crisis. Just as sub-prime lending was exploding, CRA was losing force and relevance. And the worst offenders, the independent mortgage companies, were never subject to CRA — or any federal regulator. Law didn’t make them lend. The profit motive did. And that is not political correctness. It is correctness”
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Y’all are still in here grasping at straws?
Spin me a story where some banker is being audited. Supposedly it “empowered regulators to punish bankers” and the logical extension of that there must have been some punishing. A gun to the head.
The regulator comes in and gives him a written report:
YOU NEED TO GIVE OUT 1,000 SHAKY LOANS TO SUBPRIME BUYERS OR YOU WILL BE SHUT DOWN
The banker is thoroughly cowed by this near-miss with the vicious regulator and meekly complies.
If CRA were the key element y’all think it is, then there will be plenty of stories like that and banking being what it is there will be plentiful paper trails and official letters. There’d have to be a metric ton of cowing going on, to force all these righteous bankers to abandon decades of sensible risk management practices and drive straight off the cliff. Given how video cameras are everywhere in banks there’d probably be some footage somewhere too of these meetings with the regulators they could publish, where the bankers get browbeat over their CRA non-compliance.
I can pass a law the Bap33 Emperor Act. If nobody takes it seriously and Bap33 is not treated as the emperor complete with all the cowtowing and executions of the unrighteous and such, well then it’s not been an act with any teeth has it.
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tatupu,
why would you counter with a speech (opinion) and a blog? You specified reputable sources. I gave you reputable sources. Use one in-kind with mine or conceede. Thank you.
Vincente,
In my post above the answer to your post sits unread. Klinton added teeth.
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@BAP
Finally, some articles worth reading…yes, Bush Sr. wanted to reverse the S&L Crisis of 89 and yes, Clinton wanted to target minorities with home loans.
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elvis says
I am continually amazed at how stupid people are often so proud of it.
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@Elvis.
Conservatives mainly cite the consitution when they think your right to bear arms are being encroached upon. Liberals also cite the constitution, just when they want gay marriage. Lets move past that, you say you want smaller government, free enterprise and no public services in the form of Socialism right? Explain to me what a conservative government would look like so that i can better understand your rant?….Explain what a conservative goverment would look like with no Socialism or point me to a link?
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Bap33 says
Beacause those sources had FACTS. A study was done disproving your hypothesis that the CRA had an effect on the housing crisis. Not sure if you noticed, but your sources were opinions. Opinions without facts. No studies. No data.
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tatupu70 says
…… lmao …… irony is great humor. If you find all facts that support my view to be opinions, and all opinions that support your view to be facts, then I guess we need to dial back and agree on what the definition of “is” is. lol
In closing, you refused to pick three sources for me to use because you would then have to use them and knew that would end your debate. See how that works?
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Bap33 says
OK–I’m tiring of this inane argument. Generally, facts have numbers with them. Like–
tatupu70 says
or
tatupu70 says
whereas opinions don’t. such as:
Bap33 says
or:
Bap33 says
See the difference?
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In your very post is an obvious pile of crap … higher priced loans …. and percentages of the whole … is not the point made by ANYTHING I have shared … the point made (to any fair minded reader) is that the liberal pukes in gov forced social engineering tactics onto banks and THAT started the insane bubble. And B Frank, Barry, and ACORN were accomplices.
And the last quote you put up, from Walter Williams, you dispute? Really? That’s absurd.
But, the FACT that you REFUSE to pick some sources for us BOTH to use shows that you have BIAS. I have openly been willing to use credable sources that you pick … and you refuse. Explain that please. Wouldn’t that help find common ground and proof of FACT vs OPINION?
If you want to read numbers, graphs, and have words like “a study says”, “an expert said”, or some other crap like that, I’m sure I can find that too. But, instead, howabout you simply pick the top three sources that you feel are credable, and deal in 100% un-biased facts with a complete lack of opinions. Ready? Go!! I’m waiting.
BY the way … do you get tired from skipping all around and avoiding any question answering? Wait, skip that, it was a question. lmao. Please do not start all over at this point again:
tatupu70 says
an opinion about opinions … now that IS funny. lmao.
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Ok, what is the CRA? I didn’t see any explanation for this abbreviation.
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Bap33 says
Your linked articles PROVE nothing of the sort. A lot of supposition and “obviously” but no proof of teeth. Show me one bank that got punished by it’s regulators under CRA for not giving out enough risky loans. No teeth marks are evident.
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Bap33 says
Yes, I dispute that quote as well as your premise above. It’s ridiculous. If I’m following your theory, what you’re saying is that the “pukes” pressured a bank in Compton to make a loan to an underprivilaged applicant. OK, I don’t really think this happened, but we’ll assume for the sake of argument that it did. How again did that have any relevance to Countrywide making a loan to someone in Granite Bay, CA? The guys up at Countrywide said–Oh, crap, banks in Compton are making bad loans! We need to get in on this!! Let’s start doing it too!!!
And, I haven’t answered your question about 3 sources because I don’t understand why you’d want to limit your research? I can easily pick three that would back me, but why? I just wanted to eliminate the use of crazy bloggers that have an obvious political bent to them.
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Tatupu, my understanding of the debacle called CRA is that, for example, Countrywide in Granite Bay would need a significant number of CRA loans on their books to prove to the regulators that they were in compliance with CRA…never mind there may be no “unqualified” homes or borrowers in Granite Bay. Nevertheless - for Countrywide to comply they MUST have such loans on their books - the solution? Simple, buy CRA loans from an area where they are prevalent, like Compton.
Vincente - based on your comments I would bet that you have NEVER started or owned any type of business. If you had you would not be making the type of comments that you are.
End of line.
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Thanks Elvis, but my private business doesn’t do anything we are not FORCED to do. If some government agency sent me a letter saying “we’d really like you to do X & Y” but never came down and did anything about it I’d toss the paper in the trash. I find it hard to believe y’all actually buy that the MORTGAGE LENDERS who are tossing out loans right & left and make tons of commission, give a rat’s behind about some meaningless toothless thing like CRA. You think the folks at CountryWide were quaking in their boots they might get shutdown by CRA any second? Heck no, if it did anything at all it gave them the green light to do more of what they were already doing. The very idea that Angelo Mozilo was being beat behind the woodshed and FORCED to cut his risk management and FORCED to make more money in the short term is ludicrous. You guys have the cart before the horse.
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elvis–
Actually, Countrywide was exempt from the CRA
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Elvis–
Further, your theory doesn’t bear out with the facts. Foreclosure rates in Compton are in line with what would be expected during a downturn in the economy, whereas foreclosure rates in Granite Bay and other non-CRA areas were and are much, much higher than would be expected. If Countrywide just bought the loans from CRA areas, then all the foreclosures would be in CRA areas. Which they aren’t.
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Which lender was it that was sued by Obama on behalf of his (unqualified) borrower? That wasn’t to only lawsuit - it was the only high profile lawsuit. And regardless of the spin you guys put on CRA, defending something as dumb as CRA is doesn’t make any sense at all. Government has no business being in the housing business, or in the lending business, nor should the government enable the Fed to engage in price fixing and interest rate manipulation. The result is the catastrophe in which the country is experiencing. Defend the putrid pile of slop all you want. Go ahead, make my day.
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Vincente…well it looks like I was right after all. You have no personal experience with the government’s ability to threaten, bully, manipulate and ruin your business - because you’ve never had one. If you had, you would know better, its that simple. Government is not your friend.
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The CRA “regulators”, bullying bankers around and creating this mess is not just ludicrous it’s laughable. FedGov may not be YOUR friend or mine, but it’s BFF with the BANKSTERS Elvis. Thanks for confirming you do have a reading comprehension issue I am in engaged in a partnership in a small business. Evidence demonstrates FedGov does whatever the bankers want, and any pretense at regulation is just that.
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elvis says
That’s a different argument altogether. You’re wrong about that too, but I think we’d need to start a new post to have that discussion. This post is just showing that the CRA had very little to no affect on the housing bubble.
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I’m coming late to this so excuse me if its been mentioned already but it seems to me that a simple way to begin to evaluate the impact of the CRA is to examine the timeline and compare it to the mortgage defaults.
The CRA was enacted in 1995 and its regulations broke down home-loan data by neighborhood, income, and race; it encouraged community groups to complain to banks and regulators by allowing community groups that marketed loans to collect a brokers fee. Fannie Mae was allowed to receive affordable housing credit for buying subprime securities. Then in Sept 1999 Fannie Mae eased the credit requirements to encourage banks to extend home mortgages to individuals whose credit is not good enough to qualify for conventional loans, and in November the Gramm-Leach-Bliley Act “Financial Services Modernization Act” repealed Glass-Steagall Act which deregulated banking, insurance and securities. This deregualtion of the banks allowed them to split up and package & repackage the loans and to maintain balances based on these poorly made loans of a far far thinner margin than what had been generally percieved to be safe. It was the regulation that had up to that point required banks to maintain a balance of reserves in case their loans went bad and required higher percentages of down payments.
I don’t believe there was a huge default issue from the years 1996 to 2002 or so, and as the loans didn’t begin to default en masse really until a couple of years ago its the loans issued from 2000 or so on - under the rules set out by the Gramm-Leach-Bliley Act - in conjunction with the lack of back-up in the banks that would seem to be the base of the problem, not the early loans made under the CRA rules.
And this next part is not going to be seen as entirely constructive, but anyway - I wonder when will people like you stop trying to blame the poor and the minorities for all the problems in our culture. This housing bubble has been shown over and over again on these forum pages and in book after book after article after article to have been caused by deregualtion of the banks and simple greed on the part of the banks and insurance companies. Stop wasting our time and stop trying to justify your racism and ignorance with false and misleading facts.
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Vincente and tatupu,
This link was in my link post and if you would be so kind as to read it I think you will find what you say I have not shared. If you read it close it even says “proving cause and effect is hard to do” concerning CRA. Cmon guys, read the link so I don’t have to fill the blog with loads of crap that you will ignore anyways. lol
@tatupu,
Walter Williams …. you really just posted that he is wrong. Do you know who he is?
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attention race-baitors … Mr. Williams is a person of color. Irony rocks!!
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Bap33 says
Your point is?
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Bap33 says
So, what you’re saying is that your theory doesn’t hold water then? Because I reread your links and the majority deal with Barney Frank, Fannie Mae and Freddie Mac. I thought we were discussing the CRA? And none of the links contain any theories as to why the CRA would cause a non-regulated mortgage broker to make a bad loan to an applicant in a non-CRA area. And these loans are the ones that caused the housing bubble.
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tatupu70 says
And who runs Compton ? Maxine Waters.. thats who…
http://california.realestaterama.com/2009/10/20/congresswoman-maxine-waters-calls-for-more-class-action-lawsuits-to-prevent-foreclosures-ID0492.html
Washington, DC - October 20, 2009 - (RealEstateRama) — Congresswoman Maxine Waters (CA-35), Chairwoman of the Financial Services Subcommittee on Housing and Community Opportunity, recognizing the impact foreclosures are having on the country, called on the attorneys general from the nation’s 50 states to bring suit against lenders in order to force more loan modifications.“We need aggressive action to force lenders to modify the predatory loans that they made. State attorneys general and civil rights groups are taking the lead in preventing foreclosures by filing lawsuits against the originators of these predatory loans, and I commend them for their action,” Chairwoman Waters said.”
More bulling and threats by the left. Why were they not concerned about ‘predatory loans’ in 2002-2007. Why did Congresswoman Waters and the rest of the Demos wait so long to come up with ‘predatory loans’ when many were aware about the housing bubble?
Everything seemed fine back in 2002 to 2007 from Waters and dems who was defending Fannie Mae and government intervention in pumping homeownership at any cost.
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tatupu70 says
not for you my friend, not for you.
If you go to my very first post you will see I place the blame on people first, and the CRA second. I do feel it is a fact that loans were made to non-qualified buyers due to pressure (both overt and subtle) from the new support given to the CRA by Klinton. You know banks were sued into making loans tp non-qualified buyers … right? Now, since you know that did happen, and you know Obama himself was one of the masters who made a bank “pay” for not making up different loan rules based solely on someone’s skin-color or chosen place of residence (nothing about re-paying the loan was worried about by Obama — kinda like now) — then you MUST have some reason as to HOW Obama and ACORN and other activist lawyers were able to hold banks ransom … You must, must, must give me the reason/law/protocol/base-of-power that allowed that too happen. Since all of my research shows the VEHICLE used by B.Frank, Barry, and ACORN to take such action on banks was the words known as the CRA … that is my logical conclusion. For my to think otherwise I would need for you to share with me some other VEHICLE to allow the same actions by the activists upon the banks. And since a few banks were forced by lawsuit into granting unqualified loans by racisits and liberal social engineers, you can’t pretend that other banks did not act on the rulings placed on the banks that were targeted.
And one last thing, while a bank may have a building in a certian location, THAT should not mean the bank should be forced to lend to non-qualified buyers. Right? Or do you feel that money in a bank in Compton is somehow seperated from all other money and banks? Don’t be silly, friend. We both know RE is local, but $$ is global. Making any rule or law based on race/skin tone/facial expression is racist. If you say no, then we will have to find that ruler/gauge I was asking the other fellow about.
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tatupu70 says
yes - most of my points were about people.
yes- the CRA gave social engineers and liberal activists more power against banks
no - there is not any boundry in place. Maybe you mistake lending brokers with banks? You will notice that no little local banks were ever targeted.
Walter Williams sure is smart.
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http://www.highbeam.com/doc/1G1-16369608.html
Article: Lenders cry foul over fair lending prosecutions. (Oct 1994)
Back in 1990, alarm swept through the banking industry over the prospect that Community Reinvestment Act ratings might be made public. Individual bank scores had always been confidential, and the fear was that weak ratings, once revealed, would be grist for the headline mill.
That nightmare never materialized; only a tiny percentage of banks, mostly very small ones, have received poor CRA marks, and publicity has been scant. But these days, a nasty headline would be tantamount to a light slap on the wrist. The industry is now convulsed by another CRA issue whose implications are far scarier and more far-reaching: prosecution on charges of lending discrimination. …
Joined: September 19th, 2009
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Commentary
A Government-Mandated Housing Bubble
Peter J. Wallison and Edward J. Pinto, 02.16.09, 12:01 AM EST
Subprime enablers: Fannie, Freddie, HUD and Barney Frank.
http://www.forbes.com/2009/02/13/housing-bubble-subprime-opinions-contributors_0216_peter_wallison_edward_pinto.html
Where, then, did all the low-quality loans come from?
From 1994 to 2003, Fannie and Freddie’s purchases of mortgages, as a percentage of all mortgage originations, increased from 37% to an all-time high of 57%, effectively cornering the conventional conforming market. With leverage ratios that averaged 75-to-1, and funds raised with implicit government backing, the GSEs were pouring money into the housing market. This in itself would have driven the housing bubble.
But it also appears that, perhaps as early as 1993, Fannie Mae began to offer easy financing terms and lowered its loan standards in order to meet congressionally mandated affordable housing goals and fulfill the company’s trillion-dollar commitment. For example, in each of the years 2000 and 2001, the first years for which data are available, 18% of Fannie’s originations–totaling $157 billion–were loans with FICO scores of less than 660 (the federal regulators’ cut-off point for defining subprime loans). There is no equivalent data available for Freddie, but it is likely that its purchases were proportionately the same, amounting to an estimated $120 billion.”
BTW, anyone recall how Fannie Mae and Freddie Mac were using using accounting fraud to cover up the losses from loans making them profitable, but were actual loses. It was to the tune of $90B back in before 2003.
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“The Community Reinvestment Act gained strength in 1995, when the Clinton administration adopted a series of tougher guidelines that banned noncompliant banks from participating in any mergers, acquisitions or expansion projects.”
NYT 2004
http://www.nytimes.com/2004/10/20/nyregion/20bank.html?pagewanted=all&position=
Joined: September 21st, 2009
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The Clinton administration adopted a series of tougher guidelines that banned noncomplient banks from participating in any mergers, acquisitions or expansion projects…unless they did what?
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Wow–the propaganda machine is in full force this morning. If I understand your position correctly, you’re saying that it’s POSSIBLE that the government pressured banks under the CRA to make risky loans. And since it might have happened, then it must be the cause of the housing bubble. Despite all evidence to the contrary.
Still, I haven’t seen anyone with a plausible explanation for how the CRA forced a non-regulated mortgage broker to make a risky loan to non-CRA area. Abe? Bap? Elvis? Anyone?
Doesn’t it seem more likely that the people just didn’t understand the risk? That everyone just assumed real estate prices would just keep rising?
Joined: September 22nd, 2009
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Wants 4/2 for $170K in 95341
Well .. lets try this another way to avoid traveling the same path redundantly. I will try to list the facts of the bubble the we all might agree on. Then add what you see I missed that is shared fact and point out any fact I list that you disagree with .. just to give us a point of referencs. Lets just try this way, please.
1) The lending standards were reduced from 20% down, to NINJA loans all around between 1995ish and 2005ish. Would you agree? If not, please pin-point the time frame for the reduction in lending standards and why.
2) Before the lending standards were reduced there were fewer possible buyers in the housing pool. Would you agree? If you disagree please share why the buyer pool increased.
3) The increase in pretend “entry level” buyers thanks to the new lower standards created higher demand and accelerated building/flipping/speculation. Would you agree? If you disagree, please explain where the increase in demand came from.
4) A push upwards in all markets due to the upwards push from the bottom was the next step in the bubble. Would you agree? If you feel the bubble was not expanded bottom-first, please give some detail.
Those are just 4 steps of the bubble reduced to very common terms in an effort to find where we do agree. I am not trying to load up on you or put words in your mouth. Would you please share your position on these 4 areas and add any detail that you feel would express your view better. Thank you.
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OK–fair enough.
1. Yes, I would agree that lending standards were reduced in the early to mid-2000s
2. I don’t know about that. I’d have to research the possible buyers in the housing pool. Are you thinking that because of house prices rising, people were priced out under normal lending standards?
3. I’m not sure I’d agree with that. I think the fact that prices were rising led to a speculative market–people chasing after returns. When you see your friend/neighbor/cousin make good $$ flipping or owning a house, you start asking why you couldn’t do it too. The lower lending standards certainly allowed people to buy who had no reason buying though. So I mostly agree.
4. Yep–I’d agree with that.
Joined: May 7th, 2007
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Bap33 says
Or conversely maybe CRA just gave the “bad actors” the excuses they needed to commit fraud. You encourage me to lower my lending standards for a few people? Great I’ll lower them across the board, clean up in fees, and get out of town before this all blows up. Sounds like a failure in REGULATION which of course will rankle you.
Joined: September 21st, 2009
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Comments: 53
OK, so where did it all start? We’re right back to the Community Reinvestment Act…aren’t we? The current economic collapse had its roots in the CRA which is the main point. And like a tree, the problems created by CRA didn’t happen over night - it took years, even decades for the damage completly manifest itself.
Tax payers will always be better off with less government intervention as opposed to more. Yes, yes, I know…of course we need police, firefighters, teachers and the like but what we don’t need is never-ending government intervention, bordering on oppression - thats all. There so many laws now and new laws seem to get enacted every day. Does anyone know how many laws exist in America? I’d like to see some data on that question.
What this country badly needs is regulation allright…regulation of government!!! Abe
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Honest Abe says
No, we’re not.
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Feds get tough in enforcing banking anti-bias measure
://www.thefreelibrary.com/Feds+get+tough+in+enforcing+banking+anti-bias+measure.-a012288611
Just last month, the Federal Reserve Bank issued a cease and desist order on Farmers & Merchants Bank of Long Beach, ordering the bank to comply with the Community Reinvestment Act. Fed officials said that was believed to be the first such action by their agency.
Financial institutions which violate a cease and desist order issued by a federal financial examination agency can be fined up to $5,000 a day, said Caryl Austrian, spokeswoman for the FDIC. In addition, poor reinvestment act ratings can be used as a reason to deny any application by an institution for anything from opening a branch to merging with another institution, Austrian said.
The two rare enforcement actions by federal regulators could foreshadow a crackdown which could hit hard at Los Angeles area financial institutions which have been receiving less-than-satisfactory reinvestment act grades.
The act was passed by Congress in 1977 to prevent banks from discriminating against making loans in minority and low-income communities. Federal regulators monitor banks’ compliance with the reinvestment and regularly issue “report cards” on their performance.
Bankers in Los Angeles have been complaining that recent reinvestment act exams are getting tougher, said Sal Serrantino, president of California Research Corp., a top banking consultant who has instituted reinvestment act compliance programs at more than 40 area banks.
“I would not be surprised if we have more C&Ds (cease and desist orders) brought by regulators against area banks,” Serrantino said. He has recently reviewed more than 100 reinvestment act reports for area banks and some “are just shocking” for their non-compliance, he said.
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The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities
Howard Husock (Winter 2000)
http://www.city-journal.org/html/10_1_the_trillion_dollar.html
“The Federal Reserve Bank of Dallas had it right when it said—in a paper pointedly entitled “Red Lining or Red Herring?”—”the CRA may not be needed in today’s financial environment to ensure all segments of our economy enjoy access to credit.” True, some households—those with a history of credit problems, for instance, or those buying homes in neighborhoods where re-selling them might be difficult—may not qualify for loans at all, and some may have to pay higher interest rates, in reflection of higher risk. But higher rates in such situations are balanced by lower house prices. This is not a conspiracy against the poor; it’s how markets measure risk and work to make credit available.”
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PATTERN SHOWS RISE IN MORTGAGE LOANS FOR MINORITIES
http://nl.newsbank.com/nl-search/we/Archives?p_action=doc&p_docid=0F5741D8CC2F6C83&p_docnum=1&s_dlid=DL0109102501285531710&s_ecproduct=SUB-FREE&s_ecprodtype=INSTANT&s_trackval=GooglePM&s_siteloc=&s_referrer=&s_subterm=Subscription%20until%3A%2012%2F14%2F2015%2011%3A59%20PM&s_docsbal=%20&s_subexpires=12%2F14%2F2015%2011%3A59%20PM&s_docstart=&s_docsleft=&s_docsread=&s_username=freeuser&s_accountid=AC0109083112065524669&s_upgradeable=noFebruary 15,
1996 from All Things Considered
“MELISSA BLOCK: With videos like this one, Countrywide has been actively courting these perspective home owners, as have many other lenders. In part, the banks are responding to the pressures of the Community Re-investment Act or CRA, that requires them to lend in poor communities where they take deposits. Disclosure laws also require them to report their home mortgage lending patterns, broken down by race, sex and income. Unlike banks, mortgage companies aren’t covered by the CRA, but they too are responding to congressional pressure.”
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Lenders cry foul over fair lending prosecutions.
US Banker
October 1, 1994
Author:Marshall, Jeffrey
http://www.highbeam.com/doc/1G1-16369608.html
Back in 1990, alarm swept through the banking industry over the prospect that Community Reinvestment Act ratings might be made public. Individual bank scores had always been confidential, and the fear was that weak ratings, once revealed, would be grist for the headline mill.
That nightmare never materialized; only a tiny percentage of banks, mostly very small ones, have received poor CRA marks, and publicity has been scant. But these days, a nasty headline would be tantamount to a light slap on the wrist. The industry is now convulsed by another CRA issue whose implications are far scarier and more far-reaching: prosecution on charges of lending discrimination. …
Which it did and banks were monitored for compliance to CRA penalized when non-compliance.
All started back in the 90s all happening while we slept…
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Wants 4/2 for $170K in 95341
great .. lets go ahead and settle the #2 issue of an increased buyers pool from the lowered standards right off the bat.
If there were already buyers making loans at 20%, why make the changes brought forth by gov action … just for an example, the CRA idea?
If the change was made to allow unqualified buyers into the market, those new buyers were ADDITIONAL buyers to the current system. I’m intentionally skipping over the details of those buyers, and the loans, I’m just hoping to express the increased buyers pool from easier qulification in such a manner that you agree that it is a fact.
I think words such as “exclusive” are used for country clubs and spas with really high access rates. They do not have to put a cap on membership, becasue the price does so automaticly. That’s why Vegas hotels have 800 regular rooms for every penthouse. But, if easy money was made available to anyone wanting to visit Vegas, there would be alot more penthouses … (I know, crappy example, but I’m trying!! lol)
Anyways, lets work through the issue of an increased pool of buyers to move things along … please share some detail on why you would not feel an increase in the buyer pool would be an effect from easy lending. Thank you.
Joined: September 22nd, 2009
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Wants 4/2 for $170K in 95341
Vicente says
if you were to have different lending standards for different people based on anything but credit scores and ability to repay a loan … what then would you base these new standards on? The answer is known, and doing so would result in lawsuits from anyone not in a protected class that was denyed a loan, so banks had to follow the laws of equal treatment without regard to race or sex and open the flood gates to everyone … can’t have it both ways folks. Just my opinion.
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Wants 4/2 for $170K in 95341
tatupu70 says
sorry, I missed this point before. No, I do not feel there is any such thing as “priced out”. I feel that is a REwhore term for “we want prices to stay high”. There was never a home built before 1995 in my county that did not have a buyer before it even started to be built. never. And houses were getting built all the time. So, in my opinion, “priced out” is a REwhore term to make an excuse to manipulate the market. But, we can discuss it more if you have an issue with this area.
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Bap33 says
I believe it was to ensure that banks wouldn’t discriminate against minorities and lower income applicants.
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Bap33 says
I would agree with that. But that’s not really what you asked. Here’s your question from before:Bap33 says
I just don’t know if I agree about the timing. ie, fewer buyers led to reduction in lending standards.
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Wants 4/2 for $170K in 95341
so, changes were made to make banks loan to low-income people. Would this create more buyers? As an aside, would it expose the banks to more defaults? And as a further aside, would a little wink between gov and banks saying “don’t worry, we will make Fanny and Freddy buy them all” make the whole stockmarket derivities crap take off?? ( I know, off subject, but I think I read where you said something like this already so we already agree. .. lol)
ok, back to our discussion: so, changes were made to make banks loan to low-income people. Would this create more buyers?
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Wants 4/2 for $170K in 95341
tatupu70 says
ok .. I may be not keeping up here … are you suggesting that lending standards were lowered to create more buyers, or are you suggesting that fewer buyers made lower standards needed? Just clairifing.
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Bap33 says
Sure, no problem. Neither actually. I’m obviously not doing a very good job of explaining. I’m trying to say that lending standards may have been lowered independently of # of buyers.
No doubt that once lending standards are lowered, it will lead to more qualified buyers, though.
Joined: September 23rd, 2009
Posts: 16
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@BAP33
Thats all you had to say in the first place, I deleted the post earlier this morning. I am not a racist nor liberal/conservative, my concern is with the betterment of the USA. Policies that I support only focus on what is right for American Workers, Businesses and Citizens…..regardless of race. There are 299 million immigrants in this country, lets not forget that fact. Foreign issues that are not relevant to our country should not be of concern to us as Americans, but we empathize with policies that ensure other receiving countries economies grow while ours continue to shrink. I never accused you of racism, I accused you of denying you were speaking of a Black American mother on crack, 6 generations removed from slavery. That does not indicate you as a “racist” (your words). I just think you want to deny ever have made those comments however you can, if my previous posts seem a bit pointed then I would like for you to start realizing that America can no longer afford to wait for action. We need real change in the form of less government spending, lower taxes for businesses, incentives for businesses to keep jobs local, tougher laws on crime, and increased reform of social welfare policies like Universal Healthcare, no child left behind, welfare to work and FHA, Fannie Mae, etc.
These are neither liberal or conservative views.
Crazy Laws I would support:
1. If 1 gangbanger commits a crime, then they all commit a crime. Charge them all with murder for the one individuals crime
2. Cancel all welfare, healthcare for illegal immigrants
3. Place the military at the CA and TX borders, gun down anyone attempting to cross illegally
4. Legalize any illegal immigrants willing to pursure a Masters Degree in college and learn extremely fluent ENGLISH
5. Cut off welfare benefits for anyone after 18 mos, if you havent found a job after 18 mos then you just aint trying
6. Setup a tent city in Mexico for the lowlifes who refuse to work or pursue higher education in our country
7. Demilitarize Russia, China and any other country that is a immediate threat to the security of the United States.
8. I would bomb these countries back into the middle ages because they are not free markets where we can sell American products.
9. Round up all Crips, Bloods, KKK, Mexican Mafia and send them to live in the tent cities of Mexico.
10. Shutdown all drug trafficking by bombing Columbia, Mexico and France as necessary, then legalize Marijuana for the tax and license profits.
Education - No child left behind is nice in theory but in reality without the receiving the same funding as we did with Iraq, the program will fail. I was happy to see Bush Jr. kick off this program but it still needs funding else we should prepare to watch it fail. We must UP our investment in education and lower our investment in WAR. We need to kick the parents in the butts to make this program successful, there needs to be less TV and more time spent reading, studying the various subjects provided.
War Against Terror - There were no weapons of mass destruction, therefore, we are fighting for unknown reasons and spending unnecessarily to protect a nation that we destroyed. 50B per year to fund this war, and Obama is continuing the same policies. This leads me to believe once he got into office he found out we have other long term interests at play with the region….”interests” that the American public have not been made aware. We need to refocus our efforts on what is going on in America, Obama needs to act on what he said he would and get our troops out of these failed states. Yes, we should leave a residual force to prevent any of our enemies from interferring in local matters. Yes, we should reap the benefits of the oil profits…we own these countries. Invest that 1.2billion in innovations of weapon technologies and FBI agents.
Economics - This is not a partisan issue. Plain and simply, George Bush Sr., Bill Clinton, George Bush Jr. did not push for any regulations on businesses or the financial sector. They were too busy reversing the S&L and DOT com downturns. The Gramm-Leach act repealed regulations put forth after the crash of 1929 leaving the gates wide open for creative loans. Bush Sr.-Clinton-Bush Jr. in their attempts to ward off the S&L Crisis of 1989 and the DOT com crash of 1999 had no other choice. It worked for a little while but as with all gimmicks it did not last. We cannot fund GDP with the equity in the housing market, we have to bring jobs back to America and allow the markets to reset. Prices of products, real estate must drop to a point where they are in line with salaries. New industries must be created and dominated by American businesses, trickling down to the American Worker, then to the products that we buy.
Offshoring/Foreign Products - Toyota employs 7,000 Americans and 70,000 japanese nationals. GM used to employ 68,000 Americans and that is down to 34,000.
You do the math and tell me whom benefits the American worker more so?
Immigration - Harsh, you say? The below laws belong to the immigration laws of
MEXICO!
1. If you migrate to this county, you must speak the native language
2. You have to be a professional or an investor. No unskilled workers
allowed.
3. There will be no special bilingual programs in the schools, no
special ballots for elections, all government business will be
conducted
in our language.
4. Foreigners will NOT have the right to vote no matter how long they
are here.
5 Foreigners will NEVER be able to hold political office.
6. Foreigners will not be a burden to the taxpayers. No welfare, no
food
stamps, no health care, or other government assistance programs.
7. Foreigners can invest in this country, but it must be an amount
equal to 40,000 times the daily minimum wage.
8. If foreigners do come and want to buy land that will be okay, BUT
options will be restricted. You are not allowed waterfront property.
That is reserved for citizens naturally born into this country.
9. Foreigners may not protest; no demonstrations, no waving a foreign
flag, no political organizing, no badmouthing our president or his
policies, if you do you will be sent home.
10. If you do come to this country illegally, you will be hunted down
and sent straight to jail.
On Rhetoric
Who cares is Bush held hands with another leader?
Who cares if Bush kiss him on the cheek?
Who cares if Obama has Muslim heritage?
Who cares if Obama doesnt have the long format birth certificate?
Who cares if Obama deserves the Nobel Prize?
Who cares if Obama bowed to another leader?
Who cares if Clinton inhaled or not?
Who cares if Clinton slept around?
On Obama Nobel Peace Prize
1. For those of you who question his birth rights, I say that you should leave your rural neighborhoods to become a part of the rest of society, stop dating your cousins and pursue an education higher than the 3rd grade level. Even my 3 year old can read through the rhetoric of his birth rights.
2. For those of you who doubt his qualifications for the Nobel Prize, remember, he is the leader of the free world…something that you or I will never accomplish. He has brought many together under one single cause with just a few inspirational speeches, something many of your pastors have yet to accomplish. Relish this moment in history, grow your families and stop being anti-Obama for the simple fact the entire world was anti-BUSH.
3. For those of you that hold his articulation in disdain, try reading a book. He is the most articulate canidate we have ever seen…I wouldnt pass on him for a job interview and couldnt pass on his run for President.
4. For those of you who tout him as a Socialist, see patricks pledge against socialism. If you are nuts enough to stop contributing to any of the following programs then please feel free to exit left to Mexico. Mexico does not have any of these public services, so feel free to be a proud Mexican.
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Wants 4/2 for $170K in 95341
4X, I agree with 99% of your points.
tatupu,
Great, we are getting someplace. If the lending standards were changed without regard to increasing the number of buyers, (I agree that is possible) then I’m guessing your point would be that it was a done to change the demografic of buyers? (CRA-ish and possible) Outside of those two things, I don’t think the reduced standards did much else with regard to buyers. So, we have agreed that the popualtion and demographic of sub-standard buyers increased from the reduced standards, and the reason the standards were reduced were actually buyer specific, but the exact focus of the action can be a point of discussion … Meaning there were more buyers created from lower standards, but the standars could have been lowered for reasons “X” and/or “Y” and/or “Z”. Right? If this is correct then we can cross off #1, #2, and #3 and move to #4 for clarifiaction. Since the discussion is about bubble creation I think I can move from here, but if I am still missing your point, please continue. Thanks.
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Bap33 says
Joined: September 22nd, 2009
Posts: 0
Comments: 160
Crap–I must have mess up with my last post. Let me try again:
Bap33 says
I agree with the first half of your statement, but have a small quibble with the latter part. I think that lending standards were reduced because the RE industry (mortgage brokers, banks, even Wall St.) didn’t understand the risk of the loans and was trying to increase profits. Free market at work.
OK–please continue
Joined: September 22nd, 2009
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Wants 4/2 for $170K in 95341
Ok, I think we should smooth out this area a little bit more. You put mortagage brokers, banks, and Wall Street all in one SuperGroup, and figure that they found a way to have lending standards changed(1), and these new lower standard loans/buyers would result in higher profits (2).
I’ll just ask my questions as if the above is correct, and if I messed up I’ll re-shoot again … lol
(1) How did/would the SuperGroup exact their desire for lower standards? Where do the protected roups come into this process?
(2) How did/would banks and mortgage folks feel easy lending to folks that are of a higher default risk equate to higher profits? Would that happen after they were told that Fanny and Freddy would buy bad debts? If “yes”, then who was it that told the banks the bad debt would be bought? Finally, buying bad debt cant happen until a bad note is wrote … and a bad note cant be wrote withour lose lending standards … so we are kinda back at the point of how/why those standards were loosed.
I only ask those questions to see what you have placed together in your view, and do not intend to argue any point about your view, just curious.
Ok, lets re-cap,
tatupu70 says
And I can agree with your points, so here we are. We agree the standards changed (1). Those changes resulted in more buyers(2). More buyers drive prices up(3). From there the monster grew(4). So, we agree.
The devil is in the details though where CRA, Frank, Barry, ACORN, and Fanny are concerned, so if you agree, we can detail each step in order.
Deatils of #1) I think the changes in the standards came as a result of activists and social engineer types that forced lower standards upon banks for no reason other than to give non-qualified buyers (most are “of color” but not exclusive) a loan… while you feel banks(and other money movers) acted on their own out of greed, with no result wanted other than higher profits. Is that right? Please correct me as needed and contiue your point about #1.
Joined: September 30th, 2007
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Read this article.
http://www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine
I present this one because its very comprehensive and well laid out. I cold offer a ton more but thats a good place to start.
It seems pretty well documented that “activists and social engineer types”, liberal elitist lefty latte drinkers no doubt, were not so much the cause of the shift as the amazingly high profits that could be generated by selling packaged securitizing mortgages and charging related fees after the CAsey-Stengal act was dropped.
“activists and social engineer types that forced lower standards upon banks for no reason other than to give non-qualified buyers (most are “of color” but not exclusive) a loan…” Honestly, I don’t know where you get this stuff or why you continue to believe it. According to your version the poor banks - currently making Billions in profit - are the victims here. Amazing.
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Bap33 says
Very easily. As Kent said, by repackaging the mortgages as securities with AAA ratings, they created an artificial demand for them. Artificial because noone understood the risk of default. It’s as if Wall St. was suddenly able to give junk bonds AAA ratings. The demand would obviously be greater than if the junk bonds had their realistic BBB- or whatever rating.
Bap33 says
Could be two answers to that depending on how smart the banker and mortgage folk were. Mostly they felt easy because they thought RE only went up and that it didn’t matter if a small percentage defaulted, because the property would be worth more down the road anyway. Others, who were smarter, simply made the loans because they knew there was a guaranteed market for the loans and they would be easy to resell. Fanny and Freddy were certainly part of the problem. But the amount of bad debt at banks and Wall St. would seem to indicate that it was far from a Freddy and Fanny problem. F and F just got caught up in the prevailing attitude everywhere…
Joined: September 22nd, 2009
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Wants 4/2 for $170K in 95341
ok .. I see your process now … and Kent’s is close, only angrier .. lol
In the #1 above, I meant “protected groups”, as in the targeted population for gov actions such as CRA. Where they just pawns of the banks?
By the way .. the demand for those crappy bundles of loans was very real, not artificial. lol. The money behind them was fake, the buyer worked at a fake job, and those HELOCS were backed by fake equity … but that dang paper on WallStreet enjoyed actual demand. lol. I Hate Banksters.
ok .. back on track — I do understand what you are saying about the re-branding of loans to market them on WallStreet …. but we both say that happened AFTER the new loan standards were created …. so, are you saying the SuperGroups laid a plan to allow loose lending to unqualified buyers to then take the loans and market them? Is that close? If that is close then my only questions are these:
1) Why didn’t the banks do the same bundleing with the loans made under the pre-CRA system, and if they did do that already - did the good loans not make as much money for some reason?
2) If banks “wanted” to do this, why were they sued by Barry and ACORN for not granting the types of loans you are suggesting they really wanted to be writing already? This point here is an important one so please take time and do not be offended as we move through this part. I will try to not be abusive or arguementitive. Thanks.
Joined: September 22nd, 2009
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Wants 4/2 for $170K in 95341
@Kent,
do you think the following paragraph, from the WSJ is correct, and if not would you provide a reason? Thank you.
Peter J. Wallison - WSJ - “The answer, of course, is that it was government policy for these poor quality loans to be made. Since the early 1990s, the government has been attempting to expand home ownership in full disregard of the prudent lending principles that had previously governed the U.S. mortgage market. Now the motives of the GSEs fall into place. Fannie and Freddie were subject to “affordable housing” regulations, issued by the Department of Housing and Urban Development (HUD), which required them to buy mortgages made to home buyers who were at or below the median income. This quota began at 30% of all purchases in the early 1990s, and was gradually ratcheted up until it called for 55% of all mortgage purchases to be “affordable” in 2007, including 25% that had to be made to low-income home buyers.”
Joined: September 22nd, 2009
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Comments: 160
Bap33 says
If I said that then I apologize, I didn’t mean to. Loan standards are a function of demand–if there is a lot of demand for mortgages, then the standards will drift down. I don’t think it was prearranged thing–like as of this day, lending standards are now reduced. They just slowly got looser and looser because they found that there were willing buyers for even the riskiest loans. So, my opinion is that the demand from Wall St., et al, was the reason that lending standards became looser.
Bap33 says
I wish I could understand how the guys on Wall St. think… Who knows why these bubbles form? Something psychological? Until the mid-2000s, sanity prevailed. I’m not that up on the changes in regulation, but when the ability to securitize the loans came about, that was one key driver.
Bap33 says
That’s an easy one. I never said they wanted to write loans in the inner city to minorities. They liked writing loans in the suburbs and well off neighborhoods. Which is why the vast majority of foreclosures are in those areas, and not in the inner cities. That is a key point. Think about that one!
I’m not intimately familar with the lawsuit in question, but isn’t it possible that BofA was actually in the wrong? That maybe they discriminated against the plantiff in question?
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Wants 4/2 for $170K in 95341
tatupu70 says
On this I disagree. Most foreclosures that have already hit were sub-prime loans and in lower-income areas (at least in California). The next wave will move to better areas due to those that used their homes as ATM’s and those that sold high and bought REALLY high using some exotic poop .. amd lastly those that just zaooed all the equity and now want to stop playing the game. I am sure there is about 9,000 hits if you google Merced County and forclosures … we lead the way and we be a poor area.
Yes, BofA may have not given loans due to race …. trouble with that is, how would a loan officer know the race of an applicant? …. I don’t think loan docs have race boxes. And if the do, they shouldn’t. Having a race box to check on any aplication is racisit in my opinion.
Back to the #1 item. The point you mention about timing is important. Some suggest that re-grouping of mortgages to make WallStreet love them was a 2000 era deal. And the Changes to the CRA that I think made the loose lending posible is 1995 or so. Maybe we need to find those two dates? That may help.
anyways … I gaurentee that you will enjoy reading both pages of this link .. and the comments that follow … It is very informative. I posted this link before, but you may have only read the first page and missed the comments after the article. Enjoy
http://spectator.org/archives/2009/02/06/the-true-origins-of-this-finan
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Bap33 says
Actually, there is a separate form that you fill out for race.
Bap33 says
Agreed, but I think you are confusing sub-prime with inner city. Sub-prime loans can be made anywhere–suburbs, rural areas, high end neighborhoods, etc. Whereas CRA loans required that they be made in the inner cities.
Bap33 says
Interesting. Is Merced county a designated CRA area? My guess would be no, but I haven’t looked it up.
Joined: September 23rd, 2009
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@BAP
I am praying for this to happen, we shouldnt have to pay these people to stay in homes because of their own poor business decisions. Not our fault that they chose to take out ARMs in attempt to hussle the system. I am against doing away totally with these programs as we need to extend some good faith out to the poor, however, we shouldnt put them in neighborhoods that they cannot afford either. CRA qualifications need to be drastically raised, no way someone working at McDonalds should have the aspiration to own a home yet. Their dream should be to get into a college to start building a career.
Good points.
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Wants 4/2 for $170K in 95341
@tatupu,
There is a seperate form that gets filled out for race on home loans? How is it policed to ensure honest applicants? And what is the information used for? Honest questions, not baiting you in any way.
And when you say CRA only applies to certian markets, who draws those lines? Is there a link to a map you can share with me?
And my final question .. are race and property locatation (CRA qualifications) tied together in the loan process by a CRA mandate or did the banks want to do this as part of the profit hunting? What if the applicant qualifies but the property don’t, or vise versa? Thanks.
RE: Merced County. I’m, not sure. The population is well over 25% non-American hispanics, and well over 50% hispanics as a whole, and has a 20% unemployed legal worker rate (not including illegals here not working), had a top ten in the nation rate for teen mothers (hispanic), and for STD’s for people 15 to 25 (something like 1 in 3). Please don’t ask me to rsearch and share all of these links … I did it a long while ago and I am just going from memory. If any point rubs anyone the wrong way, please ignore what I wrote and move along. lol
4X,
I agree. That is why I feel Section 8 welfare renters should not be allowed to rent in SFH areas. #1, it results in tax payers paying the home note for weathly landlords. #2, it puts folks in an area that they would not be on their own effort. #3, Section 8 renters drive down property values in the area due to personal choices and life style that are common in the welfare community. #4, if artifically raises the rental market — juat like any other areas with direct flow from gov dollars.
I do not mind helping poor people have a safe warm home … in a publicly owned housing complex with strict behavior rules, with a high mark for personal responsibility.
Joined: September 23rd, 2009
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@BAP
I agree, and then more. I knew someone who was on section 8 from 1987 through 2004. That to me just shows they were not trying to better themselves and had no pride. The poor need education more than they do home ownership. If SFH means wealthy neighborhoods then I agree with that statement too, we should not infiltrate neighborhoods with high pride in ownership with people that do no have the income to understand the concepts. This may come off as elitist, so for clarification I had to work my way out of poverty cycle through education and building my career. I left poverty behind 15 years ago when I worked 3 jobs to get through a full load at school and never needed section 8. I had a different job after each class, so there was no need for welfare or section 8…just hard work. Now, i did get a Sallie Mae loan that i am paying back…LOL.
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Bap33 says
I’m not sure. I just remember filling it out on my last loan application.
I can do some research, but I imagine the Feds do. I have tried to find a link with a map in the past without success, but that doesn’t mean it doesn’t exist. Just that my detective skills aren’t up to the task.
And my final question .. are race and property locatation (CRA qualifications) tied together in the loan process by a CRA mandate or did the banks want to do this as part of the profit hunting? What if the applicant qualifies but the property don’t, or vise versa? Thanks.
I’m not sure I understand this question. CRA doesn’t mandate anything with regards to lending standards. That is left completely up to the bank. CRA just looks at % of loans made to CRA designated areas. The banks, of course, have the final say whether or not to make any individual loan.
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Wants 4/2 for $170K in 95341
SFH = Single Family Homes … just regular old houses. Section 8 should be public owned housing so no personal wealth through apprieciation can be made on the tax-payer dime. Just my humble opinion.
On the Cal scale I am well below poverty with a wife and three kids all on my income. But, in my little world, I’m cool. No handouts wanted or accepted. Do work for food. No higher education, just a blue collar bitter clinger.
Joined: September 23rd, 2009
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@BAP
Yep, I have a friend who bought a multifamily home in 2005 for 700K only to rent out to section 8. He financed the place in his sisters name and it is now in default…and only worth 200K. He was taking the rents and vacationing for the past 6 mos. Now, he is attempting do a short sale and to create a silent partnership with the new buyer in order to turn a profit on the Section 8 rents he is receiving. He also drives a Toyota and works at a Non-Profit faith based initiative church…I say that to paint a picture of the non-profit mindset he has when it comes to the American Worker.
We lost 500,000 and he continues to earn a profit…I am started to see why so many conservatives scream at the fiscal irresponsibility of the bailouts.
Joined: September 23rd, 2009
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…and why so many are against socialist programs like FHA, FANNIE, FREDDIE. I say we reform them with stricter requirements as many have benefitted from them.
Joined: October 24th, 2009
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Banks and mortgage lenders made bad loans because there was very little incentive for them not to and very big incentives for them to do so. They ‘passed the buck’ to FANNIE and FREDDIE and the secondary market and collected their money up front. They didn’t really care if the loans got paid back because they no longer owned them.
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iggyman says
I agree with that to a point, but if that were the case then why did we have to bailout Wells Fargo, BofA, Citi, etc. along with Countrywide, National City, etc. It’s not as if the bankers and mortgage brokers were any smarter…. They owned and continue to own a LOT of them.
Joined: September 23rd, 2009
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@TATUPU
…maybe they thought they would benefit by keeping a certain % on hand. Maybe the ones kept were considered safe. I am starting to realize that in no way should any bank owned loans be insured by our tax dollars but on the opposing end…that would freeze up credit markets that are financing growth of our GDP right?
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4X says
Yes, I’m certain they did–because they didn’t understand the risk of those loans. And they thought RE only went up…
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The CRA Loans
Defaulted at a rate less
than the others did.
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Wants 4/2 for $170K in 95341
Maybe this thread would have been shorter if the heading was “CRA helped cause the housing crash” .. and left open the chance for some blame sharing? lol
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Bap33 says
Yeah, Bap33, as a renter, my view is that many factors contributed to the crash. The CRA was just one, and not the only one, of many factors, which include:
homeowner (seller) greed
homeowner (neighborhood “comps”) greed
realtor greed
mortgage loan officer (commission) greed
lending institution greed
investment firm greed
hedge fund greed
As a renter, the deck was stacked against me by all the players listed above.
Even though we are considered “high-income” renters, we were taken advantage of just like my renter brethren in the mobile home parks.
Each and every time we earned a raise, the rents went up more. The whole thing was designed to keep us from saving anything so that the “bleed factor” that the realtors set was maintained at maximum strength so that the landlords would be able to keep us as “perma-renters” (remember that term?).
Several times we seriously considered renting a MH just to save for a downpayment. (We didn’t because we needed a garage, at least a 1-car).
We also considered living in a tent at a State Park just to get away from the real estate greed.
Unfortunately, “real estate only goes up” was on our dime.
So, I cannot in any conscience lay blame on the subprimers (CRA). That wasn’t the only factor in creating this mess.
~Misstrial
Joined: May 21st, 2009
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Misstrial,
Sounds like the housing bubble was keeping pace with you as you were coming into your stride professionally. Same story here!
We were living in an apartment complex in those years. The rent was high, but on the reasonable end because it was an old mid-40’s building with zero amenities. I took advantage of it, always scrounging and saving - not so much for a house at first (2003), but for other interests - while most of the other tenants in the building went out drinking, shopping, buying new cars, special breed dogs or designer sushi. Everytime the rent went up twenty or thirty bucks, a wave of tenants would move out, and I’d invariably hear “yeah, he or she bought a house up the street because of the increase…” and I would wonder to myself - how’s that? These were clearly folks of modest means — and I do not say that pejoratively. I’d already done the math and resigned myself to being priced-out of an insane market a couple years before, but all of a sudden, here’s the X-Ray tech and the hostess at the Olive Garden, buying 1000 sq ft tract house for over a 300K and then putting in a bunch of oak and stainless and granite. Dumpsters in driveways were the norm. I put it down to everyone having rich parents, and kept on saving.
We all know how that went. It’s hard to feel much compassion for those buyers today, even though the media paints them as hapless victims of a rope-a-dope scheme. Everyone, including the banks, got swept up in groupthink and didn’t want to feel left out of the buzz. What’s weird is that I’m seeing almost the same buzz and groupthink going on again, including with friends of mine and even in some of the posts here. I should probably copy and save those posts for posterity. The short term memory of the American public is really something to behold. Just look at the fact that a quarter million dollar home is now considered low end. Wow. That is a recent phenomena, gang. A dozen years earlier, that would have afforded you a nice spread.
Meanwhile, I still haven’t bought anything because the noise floor is still much too high. In fact, I suspect we are headed for housing crash redux in the next two to three years. I will happily eat my words if and when everything works out fine. However, my appetite wasn’t spoiled from having to eat my words from the bubble years and something tells me I’ll starve before the chips fall with these new schemes (FHA/low interest rates/tax rebates, etc.)
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Wants 4/2 for $170K in 95341
the media never tells about the “poor hapless buyers” that bought and flipped to the tune of $150K cash in hand after 3 years. My good friend now owns his tire shop outright, and his rental homes outright, and he took all the equity out of his soon-to-walk-away McMansion to buy his landing house outright. There were winners, but only tax payers get to be loosers in Barryville.
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Just wait; these are the same mothers who’ll be the first to grouse about higher taxes in the future!
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Austinhousingbubble says
Yep.
http://4.bp.blogspot.com/_pMscxxELHEg/SGEvq-VRRXI/AAAAAAAACMQ/HMwTAKlcLzg/s1600/HarvardMedianRatio.jpg
Here’s one laugh we can all enjoy:
http://www.msnbc.msn.com/id/8544466/ns/business-real_estate/
Joined: August 12th, 2009
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Here’s another one, about trying to buy a box for $550,000 in 2005.
http://www.msnbc.msn.com/id/8422350/ns/business-real_estate
Alot of “White Whines” (aka Yuppie Kvetching) about doll collections and kitty litter, but they do have some legit complaints about the price. $670,000 for a 1300 sq ft Levittown McHouse. And of course, they are schmucks for paying it.
Flashback: People writing letters to sellers about themselves and their family, describing themselves as the freakin’ Waltons, aren’t-we-so-nice? hahahahaha
Joined: October 29th, 2007
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LOL thunderlips11 - Thank*You for that stroll down Memory Lane.
Yeah, Austin - I hear ya….I think many tenants simply gave up and gave in to the whole real estate game for varied reasons. Some to get away from lousy landlords and ever-increasing rents and others because the banks were paying them to buy. And others because they got the warm fuzzies as new members of Club Homeowner.
I remember being shunned by the neighbors because I was a renter (God forbid!) even though I was younger, better educated and a highly trained professional - made NO difference to these people. Their WHOLE IDENTITY was in being a known as homeowner: having people wave as they washed their cars in the driveway and honk out in the supermarket parking lot, local fame….the whole deal :/
Now its all different of course….
~Misstrial
Joined: October 24th, 2009
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tatupu70 says
They got caught up in their own game. They aren’t any smarter than the rest of us. But when lending was lending - they earned their money from collecting interest on money they lent out rather then selling the loans - their incentives didn’t conflict. It was “make good loans or go broke. With securitzation it became ‘make all the loans you can find an excuse for and pocket the cash - or some other lender will. And I don’t want to explain to the board of directors why the competition is blowing us out of the water.’
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Bap33 says
If anyone is interested, I’ve laid out the major changes in lending guidelines and loan products since 1998 at http://valusage.com/housing-crisis-causes that led to values increasing so much in relation to incomes. (It’s a new site - still working out the bugs). I purposefully stayed away from getting into why those changes were made - that leads to too many drawn out debates like this one!
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Bap33 says
You do realize that TARP was enacted before Obama, right?
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Wants 4/2 for $170K in 95341
@iggy,
great grouping of info. You avoided the blame game very well and just left info. Can’t argue with info. Good job.
@tatupu,
Sure, I knew that. I’m pretty sure you know what I was getting at with my post, and for the record, Bush was a spend-a-holic. TARP, schmarp, it’s all poop. lol
You know, one area we skipped in placing blame was the need of a buyer demografic that would not be able to place a proper value on homes and dollars … while buying the stucco-wrapped crap that was pumped into the “entry level” market of 2002-2006. Did you ever catch the loacal paper’s putting out their cheerleader crap about how the minorities were doing so well by tracking “sir names of owners’? What a crock. Do they track sir (or is it sur?) names of forclosed loan-liars now? THat would be good info. Do you feel a buyer demografic that lacked some home value/dollar value ability was part of the needed mix? Or do you think they were all greed driven? Or what? Thanks.
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The data is clear. Government initiatives in 1994 which included revisions to the CRA and HUD’s directing Fannie/Freddie to allocate massive sums of money to subprime loans distorted Homeownership in the US. In a matter of months Homeownership exceeded the historical record high and continued to rise rapidly. Rising homeownership caused prices to begin to rise unsustainably in 1997.
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Wants 4/2 for $170K in 95341
@tatupu,
do you agree with the data in the graph?
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whitneyross says
Yes, the data is probably right. Home ownership definitely increased. The logic is flawed though. I’ll give you an example to try to illustrate it for you and whitney.
I went to the local Qick-E-Mart to buy a soda because it was hot and I was thirsty. While I was there I decided to try a diet mountain dew. Never had one before. While I was walking up to the counter to buy it, a guy bought a scratch off ticket and won $100K. Hooray!
So, now when I tell the story he won because I was there buying a diet mountain dew. The data is clear. Noone had won the lottery in that store until I picked out the Dt. Mountain Dew. And as soon as I picked it out somone won! Eureka! It quenched my thirst too–it’s a miracle drink.
Put simply, just because B follows A doesn’t mean A caused B.
Hope that helps.
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Now wait a moment, I can come up with another graph
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@austin
Which is exactly why Obama needs to let the markets reset themselves. We cannot continue financing GDP with equity and with 3 million more jobs due to be offshored our middle class will not be able to afford these home prices that are being inflated by the agents and their “Multiple Offer” schemes. Obama needs to act quickly as he said he would, so far he is allowing the banks, congress and the poor buyers of yesterday dictate his course….I am not with that kind of hopeless change.
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Where is the hope? The HOPE that the markets will reset? The HOPE that huge tax incentives will be provided to keep jobs local?
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@misstrial
I get the same in Sierra Madre, but when I look back I have smirk on my face because I know I am looking at the idiot that bought at the peak for 899K whereby I will get something for 450K…..should I decide to go that high.
Today, a house is like a BMW…but tomorrow it will be like an old beat up BMW, no one will want it.
Joined: August 12th, 2009
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Those dang WW2 Veterans and their Socialist Home Ownership Programs!
Another reason people turned to exotic mortgages:
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That’s about the same time they started fluoridation of the water supply! I smell a commie plot.
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4x said:
Shame on you for showing no remorse for any 6th generation children of slaves, they need our empathy and good will. Imagine if someone had of kicked you until you were down for 400 years and then all of sudden released your shackles, sent you on your way with no education or understanding of how society works.
Um… American Revolution… ever hear of it?
I dunno, I may be wrong but it sounds like you know what is better than African American’s what is best for them.
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@mike3
Right, here is the solution to African Americans problem.
A small percentage of African Americans (1/3 of the population) need to be forced to attend college enrollment and the remaining portion need to be dropped from welfare altogether. While the majority (2/3 of the population) are on the right track, building their families. About 1/3 of the population has not seperated itself from the enslaved thoughts and impoverished mentalities that came from slavery. IE Lil Wayne, Lil Kim, Biggie Smalls, Tupac. On the opposite end of the sprectrum you have Barrack Obama, Oprah Winfrey, Don Cheadle, Denzel Washington, Bill Cosby, Maya Angelou, so forth and so on…these are people that represent the real black community. The others are just a part of the poor communities that plague America. Poor people across the world are all the same…stupid and over indulgent on immoral behaviors. Just take a look at those poor Indian children in that movie Slumdog Millionaire. They are about to lose their million dollar contract because their parents wont send them to school…that is sad.
Look up Clarence 13X then you will understand why my name is 4X.
Joined: June 16th, 2007
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Here is another solid debunk of the old “CRA caused the housing crash” baloney:
http://krugman.blogs.nytimes.com/2009/11/02/cre-and-the-cra/
Also you can follow several links to read more.
Joined: September 21st, 2009
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I dunno, I may be wrong too, but it seems like the Government claims to know better than Americans what is best for us. The problem is that virtually everything the government touches turns to crap (the law of unintended consequences).
Could it be the reason that our country is losing its prosperity, its jobs, its currency is the politicians (both parties) are completely out of touch and make decisions that cause more damage than help?
The heresy of heresy’s is common sense. Heaven help us.
Joined: September 21st, 2009
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KRUGMAN IS AN IDIOT. (Notice all caps to emphasize the point) You might as well join the communist party and get it over with if you believe krugman (notice krugman in all lower case to emphasize my contempt for him and the lemmings who are ignorant enough to believe any of his crapola).
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Elvis cannot be bothered with facts nor with solid evidence. So what. No big whoop.
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elvis says
My favorite example of this was when the banks whined about Credit Card defaults and bankruptcies and got a law passed a few years back that made it very difficult to discharge Credit Card Debt.
Now, those same banks are getting hit with people sending Jingle Mail - but continuing to pay off their credit cards - because in many cases a Foreclosure is easier on your credit and much easier to discharge in Bankruptcy court than Credit Cards!
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Wants 4/2 for $170K in 95341
@ justme …. for old times sake …. if CRA did anything, good or bad, bubble or no, what did it do after the changes Komrade Klinton made? What action or activity would you point to and say “this right here was due to the CRA using the new Klinton guidelines and supporting legal structure”. Anything justme, please. Thanks.
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If every CRA loan failed, we still wouldn’t find ourselves in this situation. Therefore, it was much more than CRA.
Joined: June 16th, 2007
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@ bap33, sorry, I don’t understand the question.
I suggest reading the Krugman article. It contains the perfect evidence that CRA was a NO-OP (as they say in computing).
Joined: September 23rd, 2009
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@Elvis
I read a quote from Newsweek that would help bring light to your statement. It read:
“If the American people want the president to be more like the Barack Obama they elected, perhaps they should start acting more like the voters who elected him.”
The challenge for any president is that if they did what needs to be done (Raise Taxes, Cut Government Programs, Regulate the Banks, etc.) to bring our country back to prosperity they would not get a second term, their party would be typecast forever as the party who does nothing for the people….and the opposing party would be seen as more favorable for the long term. Voters are a fickle group, Americans even more so…we really dont want change because the first instance someone speaks of cutting programs, raising taxes or pulling out of Iraq the other side starts to bark in outrage and we change sides.
==========================
I was talking this over with Vincente and Headset in another forum.
Headset Says:
Vincente Says:
The reason I quote these folks is that many are feeling the same way you are, we have to admit that it is our very own fault…our fault for not supporting policy that gets things done. Less government, some regulation, tougher requirements for social welfare, tax incentives for businesses to bring jobs back, a pull out from Iraq/Afghan and higher taxes is what will get us out of this crisis. Only then, will we be able to start over as a nation, we should be focused on being #1 or a close #2 in various industries and stop financing our GDP on equity.
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@BAP33 @TATUP
I agree that more buyers equals higher prices however can you folks agree that there is a need and role within lending for CRA, FHA, Fair Housing Act?
I recently read that FHA was created in response to the crash of 1929 and the associated programs gave banks confidence to start lending after the crash. Almost immediately after the creation of FHA the practice of “redlining” certain neighborhoods began. Oddly enough, the practice of “redlining” is actually noted as originating within the Federal Housing Administration (FHA) in the 1930s. You may already know this, however, redlining refers to the discriminatory credit practices against low-income neighborhoods in which lenders would not lend monies to these neighborhoods. Congress passed the CRA Act in 1977 to reduce this practice, whereby there was 47 years of inaction that had passed before anything was done to increase investment in lower income neighborhoods. The law, however, emphasizes that an institution’s CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution. The CRA followed similar laws passed to reduce discrimination in the credit and housing markets including the Fair Housing Act of 1968, the Equal Credit Opportunity Act of 1974 and the Home Mortgage Disclosure Act of 1975. The Fair Housing Act and the Equal Credit Opportunity Act prohibit discrimination on the basis of race, sex, or other personal characteristics.
I do not see how the CRA caused the bubble as it was the Gramm-Leach-Bliley act that allowed the creation of Alt-A loans which were not previously available to the lower economic demographics. Prior to Gramm-Leach-Bliley lower economic communities were not afforded 400k, 500k loans.
Your thoughts?
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@BAP @TATUP
Here is how Gramm-Leach-Bliley reduced the effectiveness of CRA:
From Wiki
My point is that there is a need for the CRA but we need to reverse GLB act of 1999 passed by Clinton.
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Nice going whitney…
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@BAP
If you acknowledge that the GLB act of 1999 removed regulation that allowed the CRA to loosen its lending policies why not blame GLB?
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justme says
Im not sure why one would use Harvard Joint Studies on Housing as good source of facts
or even opinion. Fact is their former studies from 2004 to later part of the decade, misread
the RE market, and they concluded wrongly there was no bubble, nor was there a risk of any
declines to occur. They spoke about rising demand, population growth and all other matrix.
As such they turned out to have been discredited by the fact prices have and are collapsing.
And who funded Harvard Studies for the past several years.
America’s Community Bankers
Fannie Mae Foundation
Federal Home Loan Banks
Freddie Mac
Housing Assistance Council
Mortgage Bankers Association
National Association of Affordable Housing Lenders
National Association of Home Builders
National Association of Housing and Redevelopment Officials
National Association of Local Housing Finance Agencies
National Association of Realtors
National Council of State Housing Agencies
National Housing Conference
National Housing Endowment
National League of Cities
National Low Income Housing Coalition
National Multi Housing Council
U.S. Conference of Mayors
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4X, I agree with your reasoning.
I actually “blame” the removal of lending standards - and however that was done is the “cause”, I would guess. In the thread where we all laid out how we felt this thing got done to us, I put loose lending as the first action required for this bubble.
Joined: June 16th, 2007
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Some people could not be bothered to read what Krugman said before disagreeing, so I will post what he said for the record:
Zombies, zombies, everywhere. One of the enduring myths of the financial crisis has been the claim that it was the result of (a) Fannie and Freddie (b) the Community Reinvestment Act, which forced poor, helpless bankers to make loans to you-know-who. It’s a myth that won’t go away — I get asked about it almost every time I give a public lecture — even though it has been extensively debunked. (See, e.g., here.)
But reading this scary piece about commercial real estate, I realized that CRE offers yet another debunking. After all, there was no federal act driving banks to lend money for office parks and shopping malls; Fannie and Freddie weren’t in the CRE loan business; yet 55 percent — 55 percent! — of commercial mortgages that will come due before 2014 are underwater.
The lenders didn’t need government urging to dive deep into a property bubble, and drown.
You can stick that in your pipe and smoke it. Or take it to the bank. Or whatever. Just don’t ignore the obvious truth.
Joined: September 21st, 2009
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BAP -please don’t try to use common sense to make any point here. Many simply can’t handle it.
kRuGmAns OPINION is just that - an opinion. Government mandated loose lending policies like CRA were at the root of our financial meltdown no matter how much liberal spin is put on the issue.
Social, feel good, programs are designed to help the poor, pander for votes and warm the hearts of the gullible…but what they really do is put more power in the hands of sociopathic bureaucrats.
Joined: June 16th, 2007
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Honest Abe is another person that cannot be bothered with facts. In fact, when he disagrees with fact, he tries to get around the fact by labeling the fact as “opinion”.
Is that not Dishonest, Abe?
Joined: September 22nd, 2009
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Honest Abe says
True, he states an opinion. But unlike you, he backs it up with facts. See below:
justme says
If the CRA had anything to do with the bubble, why are we seeing the same thing in commercial real estate?
@BAP
OK, you agree that loose lending standards were a cause–that’s not exactly going out on a limb there. Even after seeing all the evidence here, you still refuse to admit that the CRA was a non-event in the housing bubble?
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well .. yes, I refuse to admit the CRA was a non-event .. until I am shown what the CRA did do. Share with me what the CRA “HAS DONE” 100% unavoidable actual action atributed to ONLY the CRA 100% (since the Clinton changes were put into affect) .. please do that for me so I can see what you ARE willing to give the CRA credit for … and then, if I can see what you do feel the CRA has done since Clinton’s changes, then - maybe - we can get someplace.
I also notice you did not say you agree with the “loose lending was the start of this problem”. Do you agree? No limbs needed. lol
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justme says
warning - that quote is just an opinion. Irony rocks!! lmao
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Bap33 says
I give the CRA credit for basically nothing. I think it had VERY little to no effect at all on creating the housing bubble. I thought I had already posted this several times, but I can do it again. Also not sure how that helps your understanding…
Once more, greatly simplified–Once mortgages were bundled and sold as securities with AAA ratings, there was a huge demand for them because their risk was understated. This demand created an environment where lending standards were slowly eroded creating the housing bubble.
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Bap33 says
Bap33, only in your opinion.
(fer old times sake :-))
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@justme .lol
@tatupu, I did not ask for CRA’s actions specific to bubble … sorry if that is how it reads … what I want is to know what action, any action / effect / whathaveyou would you point to and say, “THIS was done due to the CRA in the time since Clinton changed the goverening mandates.” Anything at all, not just something bubble related. Tell me something that you feel the CRA is responsible for in the time frame since the changes Clinton made. And for extra help to my understanding, explain why Clinton made changes and what you feel those changes helped to attain. Thanks.
Joined: September 22nd, 2009
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Bap33 says
Why do I feel like I’m back in school and this is my term paper assignment? I thought this board was in reference to the housing crash.
I could do some more research to better answer, but off the top of my head I don’t think the CRA has done much of anything. Clinton made changes because it had no teeth–banks were ignoring it entirely. Some studies say it has modestly improved lending to inner cities, but most say its effect has been minimal.
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tatupu70 says
Tatupu, sorry for the term paper thing. I was trying to tie stuff together with your answer. I agree, this site is bubble related, and I contend that the CRA played a role where you say no it did not. Your post says two things that we can go off of, and sneak over into the bubble arena. lol
#1) you say Clinton took action to give teeth to something that you say was doing nothing pre-Clinton and did nothing post-Clinton. Is that what you meant?
#2) You site “some studies” as having improved lending to “inner cities”. Inner cities are locations, not people. No lender that I know of gives loans to locations, so maybe we can adjust that area of your point? Do you contend that there are boundaries that RE-lenders operate inside of? Thanks.
I agree, if the CRA can be absolved of any bubble involvement as soon as we can figure out what it can get credit for. Lets not forget, Barry and ACORN did sue the bank, so something must be somewhere. Right? lol
Joined: September 23rd, 2009
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@Thomas.Wong
Are you saying that the GLB act is being used to extend CRA benefits through unethical coercion? Do you agree the act is the root cause of our problems?
Clarify your statement so I can better understand your point.
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@BAP
No problem. I was just having nightmares about my youth…
Bap33 says
Pretty much.
Bap33 says
Sorry–how about I say “some studies say it slightly improved lending to people in inner cities.” Does that help?
Bap33 says
Well, that is the point of the CRA. To encourage lending within specific boundaries (usually inner cities).
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tatupu70 says
Alrighty … now we are getting someplace. Your point is that the CRA was “intended” (common liberal issue - good intentions. lol) to “encourage” banks to give risky loans. And, “some studies” indicate that Clinton made the changes he did inorder to help “mystery enforcement entities” better exact their “encouragement”. This pretty much matches your point and view, correct?
Well … if we repalce “mystery enforcement entities” with ACORN or B.O., then the story is still historicaly accurate, as that did happen.
But, when we look at “encourage” and it is replaced with “take legal action against”, it sure seems much more direct and threatening … but since ACORN and B.O> did do just exactly that, it too fits.
So, now that Clinton made changes, we have the “intentions” of the CRA being used to exact the will of particular groups and organizations and people upon lending banks …. as it was intended to do.
But wait, there is a little problem. You suggest there are boundries between banks, or at least that the CRA’s supporters give that impression. I submit to you that THAT is absolute non-sense. And THAT is why the “intentions” of the CRA that were focused on subsidizing a particual group of risky loans were able to infect all lending standards at all institutions. You see, a few banks got taken to court because people that had no lending background were demanding that loans be given to unqualified buyers, and those same entities used the CRA as their step-stool (right or wrong). As soon as a few banks were taken to court under the CRA intentions, guess what … ALL LENDERS had that as a reason to get busy writing loans to unqualified buyers. If any lender were to turn away any buyer they would be held responsible to ACORN or B.O. or B.Frank. And, as I pointed out, all lenders operate under the same laws in all areas or a state (pretty much), so there is no magical line that makes it legal for a lender to discriminate against a brown-buyer in Fresno and not discriminate against a black-buyer in Dos Palos. ANd because there is no magic boundries, the lenders WERE FORCED BY THE CRA’s GOOD INTENTIONS to grant unqualified buyers loans in all areas. The end. Thanks.
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Bap33 says
Did I miss something? Please point out where in my post that I ever wrote the word “risky”. I’ll save you the time because you won’t find it. That’s you putting words in my mouth (or post).
The theory–whether you agree or not–was that banks were not lending to qualified applicants in inner cities. Perhaps because of discrimination, perhaps because they just weren’t familar enough with the area, who knows the reasons. In any event, the CRA was designed to try to level the playing field. Not distort it. So banks would make loans to qualified people in inner cities just like they do in wealthier areas.
Bap33 says
Really? Are you sure they were unqualified? Do you have evidence?
Bap33 says
That’s where your logic just goes haywire. It makes zero sense. Countrywide is exempt from the CRA, but they would start making bad loans because a bank was sued? Why exactly would they do that? Countrywide couldn’t be held accountable–they were exempt.
Bap33 says
I think you are confused about the CRA. It has zero to do with race. Here are some explanations from Wiki:
“The CRA was passed as a result of national pressure to address the deteriorating conditions of American cities—particularly lower-income and minority neighborhoods”
“The Community Reinvestment Act of 1977 seeks to address discrimination in loans made to individuals and businesses from low and moderate-income neighborhoods”
Now, you’re right–there are other laws preventing discrimination against borrowers based on race. Fair Housing Act, Equal Credit Opportunity Act to name a couple. But not the CRA. That deals solely with particular areas.
So, again. Your argument is completely refuted by the facts. Look at where the foreclosures took place. Look at the commercial real estate bubble. Look at the rate of inner city foreclosures (CRA areas) versus the US in general. All of these stats show that the CRA had no effect on the housing bubble.
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bap33, you are really grasping at straws here.
>>Alrighty … now we are getting someplace
No, we are not.
The fact that you cannot write an argument about housing prices without bringing ACORN into it shows once again that you have been listening to the crazy-talk of the right-wingnut AM radio stations and/or Fox News.
Apparently, you are not interested in any theory of housing prices that does not blame the bubble on poor brown people.
It is too bad that fact does not sway you.
Joined: September 21st, 2009
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All the wonderful arguments, and government provided “facts” do not change the results of yet another failed government intervention into the free market. Let me put in in a flow chart that even a government economist might understand:
Government mandated loose lending policies -> increased demand ->run up in prices and equity -> other lenders jumping inon the government created gravy train ->ripple effect to non-CRA type properties -> ripple effect continues to commercial property -> bubble -> bust.
For some, reality will not matter. Big Brother is watching.
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tatupu70 says
justme says
ok you two, please clarify the difference between minorities in inner-cities and poor-brown-people. Thanks.
@tatupu,
If you do not feel lending standards had to be reduced inorder for banks to comply with the enforcement of Clinton’s new CRA, then that’s that. No reason to beat each other up over it.
And if you do not see that reduced lending standards to anyone, based on anything would result in reduced standards to everyone based on everything, due to fair lending laws on the books already, then that’s that. We do not need to rehash our entire deal again. I’m cool with you having that view.
It is just my view that the mousetrap was built and designed by liberal intentions and the results are as plain as the scrowl on Pelosi’s face. But, that’s just me. No biggie.
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Bap33 says
There is a huge difference. Inner city is a place. Minority, poor-brown-people as you so eloquently put it are people. Again, one is a place, the other is a person. The CRA says NOTHING about race or country of origin. It only refers to red-lined neighborhoods. If a poor-white-person lives there, he too would qualify under the CRA.
Bap33 says
But we’re not talking about what “would” happen. We’re talking about what DID happen. Because there is ample evidence out there showing what DID happen. And all of it points to the same conclusion–the CRA had nothing to do with the bubble and crash.
Bap33 says
Sure–you’re welcome to believe what you like. There are lots of people who think 9/11 was a vast government conspiracy. And that the world will end in 2012. No amount of evidence showing you the truth is going to change that, is it?
Joined: June 27th, 2009
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Here’s a copy of 12 USC 2903
(a) In general
In connection with its examination of a financial institution, the appropriate Federal financial supervisory agency shall—
(1) 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; and
(2) take such record into account in its evaluation of an application for a deposit facility by such institution.
I guess people forget about that “local communities” and “consistent with the safe and sound operation of such institution” part. I’m sure many here give to charity. But, I’m fairly sure none of us here are bankrupting ourselves in the process. Providing for community development for low and moderate income people was not a significant cause the housing crash. Bank greed is. Look no further than the definition of community development found in the Regulations. “Community Development” creating affordable housing for low/moderate income households could have taken the form of “multifamily RENTAL housing.” (I am taking the information from the Clinton Era regulations.)
Other than collecting information and giving ratings on how banks were doing servicing “low, moderate, MIDDLE, and UPPER income” individuals (yes, they had to report on how they were servicing those middle and upper incomes), one question that should probably be asked is; “What was the big, scary government penalty for getting an unsatisfactory rating?
Well, other than crashing an economy and not getting a government bailout, what do big banks fear most?
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tatupu70 says
It was you that said CRA targeted minorities in inner-cities, not me. And if you are now saying you did not include people-of-color in “minorities”, or that inner-city dwellers are not poor, then you need to explain that to me. Here is your most recient words, but earlier you actually used “inner cities”, so I went with it. lol tatupu70 says
So, if that does not mention race, we are speaking different lingo’s. And, by the way,
poor-brown-people was the words of justme, not mine, I just borrowed them. Cheers.
tatupu70 says
You honestly focus on my use of “would”?? Really?? It may be a literary error, but it sure seems to flow well with the “IF” at the begining of the sentence. EX: “If you do not see that “X” WOULD cause “Y”, then that is that.” Would could be could, should, did, might, possibly, likely, did, …. feel free to focus on the trees and miss the forest. What did happen was loose lending was forced on the banks due to Clinton’s hopped-up CRA.
tatupu70 says
I did not mention CRA in this point. Perhaps thou doth protest too much? lol
Conservatives Unite !!!
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@BAP
OK–this is getting tiring again. Yes, there was a mention of minority neighborhoods in the wiki quote I used. But the point is that the CRA refers to geographical areas, not people. It seemed like you were under the impression that it was designed to help minorities–I just wanted to emphasize that it is designed to help run-down and deteriorating areas. Not people.
And my focus on the word “would” was not meant to quibble with the word choice, but with the idea that you’re hypothesizing what may happen. It already happened–let’s look at data to show why instead of coming up with theories.
I reread your post and I think I may see why you are having such a hard time giving up your CRA theory.
Bap33 says
Could you explain that a little more because I’m having a really hard time following the logic. So, if National City made a bad loan to Joe Smith in the Bay Area (mortgage amount 10X monthly salary, credit score of 580), you’re saying there is a federal law on the books stating that all banks must also make bad loans too? Could you be more specific as to what law that is?
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I think what happened is that once the government reduced the lending standards for some, it opened up Pandora’s box - so to speak. From there other banks and loan companies saw it as a way to make a fast buck and started to do the same thing. They simply took advantage of the lending frenzy that was created by the C.R.A. From there it continued to spread like a disease, pick up speed, until it ultimately self destructed and took the economy with it.
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@ Elvis
The government doesn’t set lending standards, so it obviously couldn’t reduce them. So, how did the CRA create a lending frenzy exactly?
You’re right about one thing–banks and loan companies saw a way to make a fast buck. But it had nothing to do with the CRA. And everything to do with their greed and poor understanding of the risks of the loans.
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Is Obama proposing any legislation to reverse the GRAMM-LEACH-BLILEY act or increase regulation on the CRA?
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ok Tatupu, I agree .. this gets redundant.
You contend that the CRA was wrote with some special loan rules created for helping specific areas, and without regard to those people that actually took the loan .. right?
And it did not work as intended, so Clinton “gave it teeth”, and it still has not done anything you can point to and give the CRA credit for. Is that right?
So, is it safe to say that you feel the CRA is all about locations of property and has nothing to do with the standards required for buyers to buy those properties? Is that safe to say?
All of the links I shared a while ago showed my view pretty well. Your position of the CRA not being buyer specific, but instead being property specific is interesting. That just don’t match any of the stuff I read in your links or mine, so we may as well just move along. No need to wade through the same poop. I’ll watch from the side for a while. lol
The fair lending laws would dictate that all loan qualification standards be known and applied evenly without regard to race, sex, ect ect. Whatever force that made the standards change and a bad loan to be wrote by National Credit will MANDATE a bad loan be wrote at County Bank. Period. If you say that loan changes under CRA are property specific, well then I see why you do not give CRA any credit for the bubble. And once again, I would really like you to share what CRA has 100% made happen since Clinton’s changes. Yes, it does matter, that;s why I keep trying to get you to commit on something … lol. Gnite.
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@BAP–
No special loan rules. No loan rules peiriod. It says the government will check the percentage of loans made to red-lined areas versus the total loans originated.
Nope–nothing that I can point to.
CRA *is* all about location of property. That is a fact–not my opinion. Read the actual Act if you want verification–Ryan posted a portion of it earlier. I really encourage you to read it, because it is location specific–that’s a very basic part of the Act.
And your interpretation of the fair lending laws is a little off. No judge would rule based on one loan. They’d look at the indrustry standards for loan approvals.
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ok, thanks.
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4X says
Obama isn’t supposed to propose legislation. That job belongs to the Congressman or Senator you voted for. You would be better taking it up with them.
While we are at it, lets vote out those legislators who:
1. Voted to reverse GRAMM-LEACH-BLILEY in the first place
2. Voted for the bail outs
3. Voted to abdicate Congressional responsibility to declare war by passing it off to the President
Joined: September 21st, 2009
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Maybe this will help: “Regulators in charge of enforcing CRA praised the lowering of down payments and even their elimination. Regulators told banks that lending standards that exceeded that of regulators would be considered unfair lending. This effectively meant that no money down loans were required. A Treasury Department study published from 2000 found that the CRA had successfully lowered down payments not just for CRA loans, but for all mortgages.”
www.businessinsider.com/the-cra-debate-a-users-guide-2009-6
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Nope–doesn’t help.
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elvis says
‘Elvis’ knows the CRA didn’t cause the housing crash. What he actually wants to do is pretend that anyone who disputes his assertion is defending the CRA (even though nobody took the bait) so he can call them “libs”. It’s AM talk radio nonsense and a complete waste of time.
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GOD
From what I read on the housing crash homepage the Gramm-Leach-Bliley act created the avenues how is it the fault of the CRA?
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Nomo,
Well put.
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Nomograph says
unbiased views abound
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tatupu70 says
Under fixed rate 30 year loan, the banks would recognize greater interest revenue from payment than the other flavors of ARM loans, which had lower payments.
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thomas.wong87 says
Of course. But I think we all agree that most of the bad loans were to people who wouldn’t qualify for a 30 year fixed rate loan.
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@tatupu,
well, one thing is fur sure, we agree on the “what” portion of the bubble cause.
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The CRA was an anit-discrimination law intended to “encourage” lending to minorities. (Since I’m married to a “minority” don’t play the race card with me). Okay, if a minority, or anyone else for that matter, doesn’t qualify for a loan…exactly what does it mean lenders were “encouraged” to make loans??? Could that possibly be newspeak for “lower the lending standards to make loans to people who don’t qualify” ???
Further, banks would not be able to move into new lines of business unless they had “satisfactory” CRA lending practices. Okay, what does “satisfactory” lending practices mean??? Could that mean making loans to people who where unqualified but were “minorities”???
Many on this site refuse to acknowledge cause and effect. Irresponsisble government mandated regulations were the cause and economic disaster is the effect. Something we are ALL paying the price for (except the good news is that house prices are declining)
Many of you are probably foaming at the mouth, right about… now - haha. For a look into the future read George Orwell’s 1984.
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President Obama … the agent for ” change ” has just signed into law the extension until June, 2010 of the First Time Homebuyer’s Tax Credit. Being that he is an agent of ” change “, he also signed the bill that now EXTENDS the tax credit for those that want to upgrade their home by purchasing another. Wisely, you mean & nasty capitalists are limited to a purchase price of $800,000 in order to qualify for the $6,500 tax credit.
Off the subject, but, doesn’t it make you wonder why Obama kept Bush’s Secretary of Defense Gates? I could go on, but won’t because it’s off the subject.
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Honest Abe … ” encouraged ” in real, practical terms in this case means “pressured” by the Feds. Keep in mind that the Federal Government became the lender of last resort for Fannie Mae and Freddie Mac, which naturally encouraged sloppy processing of loans that were then sold to unsuspecting investors on the secondary market. In economic terms it’s known as “moral hazzard”, i.e, once lenders know the Federal Government will back them, they will not hold to strict standards on underwriting. That’s what really happened. The lowered underwriting standards of the CRA spread like a cancer throughout the entire system. Fannie & Freddie processed an amazing 85% of all loans packaged and sold on the secondary market, with the Federal Government behind the scenes there to back them up. Political friends of both parties were put into postions at Fannie & Freddie that walked away with HUNDREDS of millions …. of this Obama says and does NOTHING. But of course, he’s too busy limiting the salaries of those rotten capitalists on Wall Street.
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Honest Abe says
Wrong.
Honest Abe says
That’s because it’s been proven on this board that there was no cause and effect.
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It’s absurd to assert that govt forced lowering of lending standards had no effect on the housing bubble/crash. The CRA morphed into government actions like this: http://ur.lc/5vf .
NY Times, Sept. 30, 1999:
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RayAmerica - THANK YOU. ZippyDDoodah - THANK YOU. I was beginning to think no one at Patrick.net had any logic or common sense…other than BAP33, elvis, Clarance and a few others.
For those who like to read, may I suggest LIBERTY AND TRYANNY by Mark Levin. Or log onto
Strike the Root.com
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Honest Abe says
As I said, it’s all just AM talk radio nonsense. For $19.95 you too can be a victim
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Hahaha. Victim? You make me laugh - that’s a liberal’s persona. Well then, it appears that you prefer tyranny over liberty. From Liberty and Tyranny: “The industrious, ernest and successful are demonized as perpetrators of various offenses against the public good, which justifies governmental intervention on behalf of an endless parade of “victims.” In this way, the perpetrator and the victim are both subordinated to the government’s authority - the former by out-right theft, the latter by a dependent existence.”
You should read it. Chapters include topics such as Liberty, the Constitution, the Welfare State, the Free Market and more. But then again none of those topics are probably of much interest to you.
“WE ARE ALL SELF MADE MEN, BUT ONLY THE SUCCESSFUL ONES ADMIT IT.” Learn from Clarance, if life’s not treating you fair - do something about it. By the way, isn’t there any liberal talk radio???
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Honest Abe says
Actually, liberals don’t need a demagogue telling them how to think. They can actually form their own opinions…
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Honest Abe says
If you don’t want to be a victim, then quit behaving like one. The first step would be to think for yourself and forget about your AM talk radio Messiah. AM talk radio hosts are only interested in selling books and products to suckers. How many have you bought?
Honest Abe says
Probably, and I’m sure it no different than ‘conservative’ talk radio: predigested opinion for weak minded people.
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tatupu70 says
tatupu70 says
tatupu70 says
… cmon, now …. don’t get angry … I’m just helping everyone lighten up.
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tatupu70 says
It was actually to extend funds to areas that had been red lined, regardless of the demographic that lived there. Here is an example of redlining in Philadelphia.
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Obviously some of you are not capable of discussing ideas yet are quick to hurl insults (tatpu & nomo). Clarance, this a quote from Wikipedia: “Congress passed the (CRA) Act in 1977 to reduce discriminatory credit practices against low income neighborhoods”. So is that an anti-discrimination law? Your call.
For some, the founding principals of our ounce great country mean nothing. Free market capitalism which created the highest standard of living in the world is now “evil.” We are on a steady march to socialism partly due to a stiff progressive income tax (one of the 10 planks of the COMMUNIST MANIFESTO). Countless “feel-good” social programs hurt our countries GDP, penalize all tax payers and often hurt the very people the government claims to be helping. We have a government endorsed fiat currency which steals from all workers, savers and people on fixed incomes via a hidden tax called inflation.
Some have not noticed that America is on the brink of financial collapse. We borrow to pay our bills and run the country. A growing number of countries are starting to refuse to even accept our currency. We have a non-compassionate abortion policy that kills as many PER WEEK as those who died in 9-11. Why would we want to kill off the very people needed to pay off the massive debt burden created by Obama and passed on to future generations?
The books I read and the thoughts I surround myself are for awareness and solution. The first step in the solution of any problem is awareness (that a problem even exists). Have any of you read the Constitution lately? The Bill of Rights? I, for one, am concerned that we are on THE ROAD TO SERFDOM (a good book), that socialsim began to raise its ugly head long before “1984″ (thats a good book) partially because liberal politicans created for all of us a WEB OF DEBT (yet another good book).
Call me stupid but I favor the rule of law, private property rights, limited government, economic opportunity without excessive government intervention, a sound currancy and life, liberty & freedom for all.
It appears some of you feel otherwise.
Joined: September 22nd, 2009
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@ Abe
Nomo is right–turn off the AM radio for awhile and learn to think for yourself.
Joined: September 18th, 2009
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In his first of six volumes of World War II, Winston Churchill described the age he observed during Germany’s armament and his country’s denial of the coming danger: ” The simple fed on the simple news provided to them and deluded themselves into a false state of security”. The looming danger of an all intrusive Federal Government is obvious to all but the simple. The simple of today believe, amazingly to me, that the very government that has caused so much havoc in our lives, as it has in the housing bubble, is the very entity that will solve all of our problems. Once freedom is relinquished, it is near impossible to ever retreive it. Wake up people …. the government doesn’t solve problems, it IS the problem.
Joined: November 6th, 2009
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tatupo, because AM radio taught me to think for myself ;), I noted that in the context of your CRA comment, your posted map of Philadelphia redlining is dated 1937, whereas the CRA was passed 40 years later in 1977. Just so you know, demographics and neighborhoods in Philadelphia changed significantly between 1937 and 1977.
CRA was govt interference to address ALLEGED discrimination in lending practices. Low income neighborhood residents often do not have the resources or earnings to qualify for home loans, so govt interfered to lower lending standards and intimidate banks into making loans to uncreditworthy individuals or individuals who could not otherwise qualify. That philosophy was a driving force behind this government mandate too in 1999 –> http://ur.lc/5vf which drove the housing bubble/crash.
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tatupu70 says
Churchill was scoffed at by the media and elite of his time too.
Abe is correct, as is Rush, as am I …. liberalism is a cancer to freedom, to America, and to Christianity …. we must move away from liberal/socialist/leftist actions and activities, or Free American Christians shall be no more (look at how we are targeted today). Both private and public, the souls of America need to heal.
AM Radio is just the latest boogieman talking point for the left to target …. about ten years ago it was “the radical Christian Right” …. lets see, before that is was the “just say no anti-drug crazies” …. hmmm and there was the whole “homo-phobe bigots” thing ….. the list goes on and on from the freak-o lefty media and those blind few that are desperatly clinging to the God-less drivel being spewed out daily. In my humble opinion, that is.
We either get right, and go RIGHT, or we stop being America, the defender of freedom. There is no more promise land or new world for free people to move to. It’s now, or never - period.
Joined: September 23rd, 2009
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ZippyDDoodah says
This was posted to clarify how and what redlining involved, It clearly stated “Regardless of the demographics..” For all we know, in 1937 there could have been a group of Pilgrim settlers in the area.
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ZippyDDoodah says
No offense–but I didn’t post that.
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Bap33 says
Wow–you’re comparing Rush Limbaugh to Winston Churchill?? OK, now I’m really laughing…
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ZippyDDoodah says
Wrong again–show me any evidence of government interfrence to lower lending standards or intimidate banks. Surely there must be many bank executives crying to the media about how the government forced them to lower their lending standards, right?
@BAP
You’re the victim now? You’re being targeted? How exactly is that?
Joined: September 21st, 2009
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TATUPU-banks could not move into new lines of business unless they had a “satisfactory” CRA score. That is the government interference you seem to be ignoring. BTW, another good site to log on is www.dollarcollapse.com. Try it, you might like it. Love, Abe
Joined: September 22nd, 2009
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tatupu70 says
Only in the areas they share. Being right is one of those areas. Being unpopular with the Nazi’s and their sheeple being another. But, other than a few other areas I dont really equate Churchill w/ Rush …. or vise versa.
tatupu70 says
ummm … hmmm …. I wrote “target”, and you wrote “victim”…… see the differences between consevative and liberal views now? But, ya, I have been victimized by liberal activist judges in mexifornia … but I choose to stay and keep in the struggle … and complain about it on here. lol.
Cheers.
Joined: September 22nd, 2009
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Honest Abe says
I’m not ignoring it. On the contrary, it’s been examined and disproven as a cause of the housing bubble and crash.
Joined: November 6th, 2009
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Yet in the very post you are responding to is a link to a NY Times article on govt forced lowering of lending standards. Let me highlight it since you seem to be willfully ignorant: “In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.”
Can you read English? Govt. mandated lowering of credit standards. CRA scored banks who had FDIC insurance (which is a requirement if they want to attract depositors) on the basis of their loans into low income communities, and that is clear intimidation. The ENTIRE IDEA behind the CRA was to lower credit requirements for lending to selected communities. Lowering of credit standards and intimidation of banks is the entire basis for the CRA, and subsequent legislation which evolved from the philosophy behind the CRA
Show us where it was “disproven”. You’re simply making things up, repeating false statements hoping no one notices
Joined: September 22nd, 2009
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ZippyDDoodah says
I’m sorry. I read the article and I saw exactly zero mentions of the CRA. Not sure how it’s relevant at all. Look–we can go back and forth on this all day. The idea of the CRA wasn’t to lower credit requirements. There is no evidence of any intimidation. Again–if bankers were being intimidated by the government, don’t you think a few of them would have come forward saying that they didn’t want to make these bad loans but the big bad government forced them to?
If you’ll read the entire thread, you’ll see that there have been several posts explaining why the CRA cannot be the cause…
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Can you imagine what would have happened if the leader of large bank came out publicly against civil rights legislation like the CRA? Banks were already being smeared by leftists as being racist in their lending practices. Their competitors would have seized upon that and chewed them to pieces. Much easier to go along with the regulators, especially when all the other banks had to play under the same rules. ‘Redlining’ is an unproven allegation of racist lending practices used to justify CRA intimidation. If bankers wanted to remain in good standing with the Feds, they had to go along to maintain a good CRA score. Regulators directly instructed banks to consider alternatives to using traditional credit histories because CRA targeted borrowers who often lacked any credit histories. Read for yourself: http://ur.lc/dub. Here is a Fed governor at a CRA conference in 1998 telling banks they better start making no-money down loans http://ur.lc/duf . Search the document for the phrase “100 percent loan-to-value ratios”. And please stop pretending that the CRA was some sort of static legislation that wasn’t evolving significantly over time
A banker who refused to relax lending standards risked being in noncompliance with the CRA. More lax lending standards were the only way of satisfying the CRA regulators. Making matters worse, the govt. pushed for greater mortgage securitization in an effort to increase CRA lending. Google HUD Secretary Andrew Cuomo’s promise of $2 trillion in Fannie and Freddie backed “affordable” mortgages. CRA is the genesis and driving force of this disaster backed by liberals who believed it was unfair not provide loans to “underpriveleged” individuals who otherwise would not have qualified for a loan
Joined: September 21st, 2009
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ZippyDDoodah - I couldn’t have said it better myself. It seems you can’t reason with unreasonable people (who refuse to acknowledge the obvious).
Tatupu, show me evidence of government intimidation that forces people to pay “voluntary” taxes. You can’t, but most pay taxes anyway (out of fear). That same method worked with banks too. Besides if banks didn’t comply with CRA, they couldn’t grow and expand into other profitable businesses. That was enough intimidation for the government to get what it wanted. By the way, now I’m curious…what principals do you endorse??? What books are you reading??
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CRA Troofers are like Moon Landing conspiracy fanatics, you will NEVER get them to admit they are wrong.
Joined: September 22nd, 2009
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@Zippy
You crack me up. I read your articles and I’m not sure where you are coming from. Nowhere in either paper does it ever mention anything about undo pressure on banks. Bankers were encouraged to do extra research to find QUALIFIED applicants. It may be hard for you to believe, but they were out there… End of story. And guess what–all these loans that were the result of “lax lending standards” as you put it actually performed much better than the rest of the mortgage industry. Yes, that’s right. CRA loans defaulted at a rate that would be expected during a recession–not at the bubble bursting rate of the market in general.
@Abe
You’re comparing paying taxes to the CRA regulation? You go to jail if you don’t pay taxes. Not quite the same thing. But in any event–you still didn’t answer my question. After this whole mess unraveled and bankers became public enemy #1, don’t you think a few of them would have said–”we didn’t want to make these loans, but the Gov’t told us we had to in order to be in compliance with the CRA” We wouldn’t be watching it on 60 minutes? But we aren’t. Because it’s a fairy tale.
Oh-the last book I read was A B C by Dr. Seuss. My 2 yr old loves it. He knows all the letters except for Q…
Joined: November 6th, 2009
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tatupo70 wrote:
Of course! they were only being “encouraged” with mandatory CRA scoring which could disqualify them from FDIC insurance. Only a little nudge, you see to help them see the light..tatupo, you are a perfect example of a closed minded zealot, ignoring all facts and evidence which contradict your position. Hilarious to read you lecturing others on being brainwashed by AM radio.
Joined: September 22nd, 2009
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@ Zippy
You have facts? And evidence? Please share. I’m looking for something showing the link between the CRA and the foreclosure crisis. Not “read between the lines” stuff. Not Freddie Mac and Fannie Mae stuff. Something showing how the CRA caused the housing crisis. It should be easy to find–there are a ton of articles describing what happened and why. Showing what types of loans, where the foreclosures are taking place, etc. Please give me some facts.
Joined: September 23rd, 2009
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It sounds like we dont care about providing affordable housing to the poor and want to attempt to make the claim that investing in these neighborhoods caused the crash. However, many more took out Alt-A loans in the more expensive neighborhoods.
I really didnt see any homes over 400K in compton, watts, los angeles….but there were plenty in Pasadena. I think this it is a moot point to say CRA caused the crash when Patrick clearly stated GRAMM-LEACH-BLILEY was the root cause.
Do away with GLB and you limit CRA ability to deliver on their promise. Period.
Joined: September 21st, 2009
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I don’t think so, the GLB Act simply allowed commercial banks, investment banks, securities firms and insurance companies to merge. Another stupid government boondoggle, but it was CRA that lowered lending standards.
Freedom leads to prosperity. America would have more prosperity if we had freedom from CRA. Freedom from GLB. Freedom from Fannie Mae. Freedom from Freddie Mac. Freedom from the Department of Energy. Freedom from punitive progressive taxes. Freedom from oppressive government. Freedom from subsidies. Freedom from government waste. Freedom from political correctness. Freedom from lawsuit abuse. Freedom from inflation. Freedom from the Federal Reserve Bank (which most of us know is not federal, has no reserves and isn’t even a bank). Freedom from stimulus plans. Freedom from bailouts. Freedom from deficit spending. Big government isn’t the solution, big government is the problem.
The bottom line? America is loosing its prosperity because we’re loosing our freedom. The solution: more freedom, more independence from government, liberty for all, and the thing that made America truly the land of opportunity…….capitalism.
For a stirring rendition of “America” by Ray Charles, log on You Tube, type in his name and look for “America”. If that doesn’t give you goose bumps nothing will. But be forewarned, its got the “G” word (god).
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Elvis & friends,
Investment & commercial banks & mortgage lenders all GAMBLING & committing FRAUD is what got us into this mess. Your kind would have us believe the CRA storm troopers were out there enforcing NINJA loans, or at best looking the other way. While somehow absolving the bankers of FRAUD plain and simple.
You remind me of this story:
Joined: September 21st, 2009
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BTW, look for the cut titled: America, The Beautiful: Ray Charles ‘91. Thank you very much.
Joined: November 5th, 2009
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elvis says
Right, and we would also have less opportunities afforded to the poor. I wouldnt say we want to end these programs, just reform them so that we dont have any waste.
Joined: November 6th, 2009
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Well then, the issue is settled!! Especially if Patrick has already “clearly stated” the explanation. No need then to deal with contradictory facts and arguments to his/your assertions. Tiny little minds who follow…
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Clarance, you’re getting close.The poor of all nationalities have the same OPPORTUNITY, but it’s the government itself that puts up roadblocks and keeps people impovishered. For example, a single non-working mother of two can get approximately $19,500 in benefits…for not working. That same person would need to earn approximately $30,000 to earn more than if she didn’t work. Even then she’d only earn about $700 more. Its hardley worth the $700 to work all year. This is a government program guaranteed to keep tens of millions in poverty and totally DEPENDENT on government. Bad for the people but good government politicians, especially when pandering for votes.
And who would “reform” the countless wasteful programs we already have….a whole new layer of government??? Government has PROVEN itself to be an unreliable and untrustworthy partner in guarding the promise of “life, liberty and the pursuit of happiness.”
You cannot destroy the free market to save it, you cannot take away freedom to protect it, and you cannot uphold freedom of speech by silencing those who disagree with the direction of our country.
Both parties are dividing the people but taking us to the same place. Debt. Servitude. Serfdom. Socialsim. Is that REALLY what we want to leave for our children and grandchildren?
Those who vote republician get bigger government, more spending and war. Those who vote democratic get bigger government, more spending and war. I’m afraid America is at a crossroad. Either a return to what made America great in the first place: freedom, liberty, opportunity, following the Constitution, limited government, sound money and capitalism. Or the loss of freedom, the loss or opportunity, the loss of liberty, oppressive government, worthless money and socialism. Which sounds better to you?
Joined: November 5th, 2009
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Honest Abe says
Right, this is why these programs need to be reformed to kick people out after 18 mos at which point that same mother would then require daycare. I am not sure which is cheaper, daycare or to keep her on welfare…but California Republican Governor just did away with the daycare programs so I have to assume it is cheaper to enable the welfare queens.
Joined: September 21st, 2009
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Clarance, if I may join in. I think you’re on to something when you said “kick people out after 18 months.” Those who should be kicked out are the politicians, who after 18 months, prove they are unworthy of the position called “Public Servant.” Unfortunately they serve themselves at public expense. The real question is how to reform the system. Maybe the system needs to collapse under its own weight and then rebuild something worthwhile out of the ashes.
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ZippyDDoodah says
The problem is Elvis & Co. didn’t bring any FACTS just arguments. Simply having an OPINION doesn’t mean you are right. It’s like watching the “argument sketch” in Monty Python. Bap33 & Elvis and what not prefer to not to reference billions in securities fraud and other IN YOUR FACE facts about misbehaviour & misdeeds, they prefer to say how “obviously” this must have all been caused by the unenforced CRA. It is not enough to watch as it is clearly revealed that men like Angelo Mozilo DECEIVED & looted customers and their own company, there must be some LIBRUL conspiracy behind it if we look hard enough. Flouridation is “obviously” a cause of tooth decay, and vaccinations are “obviously” a cause of autism for quite a lot of nutcases.
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elvis says
Forgive me if I say it’s the VOTERS who need reforming. Get up off the fricking couch and get involved or quit whining about it. Structural fiddling with the rules means jack squat when incumbents are typically voted back in no matter what they do.
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ZippyDDoodah says
Patrick:
It sounds like ZIPPY takes issue with your 12 point manifesto, which I take personally with my tiny little mind. What are your thoughts on the CRA, GLB?
Our tiny little minds want to know?
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Vicente, yes voters need to be reformed. The problem is many are ignorant of the issues. They don’t care who they vote for. They don’t care about any of the problems we as a country are facing. They don’t care about liberty or freedom. All they care about is: WHO WILL GIVE THEM THE MOST.
Who will be the guardian of the truth in a world of lies? Certainly not the politicians. They have caused America to be the most indebted country in the history of civilization. No country in the history of man has ever taxed or spent itself into prosperity.
According to Supreme Court Justice Robert H. Parker: “It is the duty of the citizen to keep government from falling into error.” That’s us - the citizen.
BTW - what solution oriented ideas do you have for America? Which direction should we be going? What do you stand for?
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Elvis,
As a former staunch Republican since Reagan I feel confident in saying that a lot of people have made the same turning as I. It has nothing to do with “voting for freebies” as the NeoCons would tell me. It has much more to do with the center of what used to be “conservatives” seeing quite clearly they got fleeced for the last few decades. Sheared like sheep on a regular basis and it has little to do with who sits in the White House or Congress on any particular day of the week. It has a lot to do with the fact that they all work for the corporations and the banks, and not for the people. The belief in the SYSTEM of which government is merely one component, is at all time low.
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my mind only looks tiny next to my enormous ….. ears.
Joined: September 21st, 2009
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Vicente, for once I agree with you!
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And for the USPS haters….
UPS to raise rates next year.
Fedex & UPS losing billions, and getting special breaks to keep them afloat like all big corporations. Those of you who say USPS are just “pigs at the public trough” frankly I can’t see any way in which the supposedly wonderful private delivery system is superior. Have several co-workers who in younger days worked for what they call “the Package Nazis” and are glad they moved on.
Joined: September 10th, 2009
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USPS,banks,wall street,home owners…..all needs money from taxpayers. If all of us wants to keep living American way of life get ready to pay heavy taxes in coming years. I don’t see any way out of this mess other than heavy taxation.
Joined: September 21st, 2009
Posts: 1
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America doesn’t have an tax problem, we have a SPENDING problem. For politicians spending is always equal to or greater than income. No matter how much we are taxed it will NEVER be enough. Socipathic politicians always have new spending plans up their sleeve. They will never be able to satisfy the unlimited demand placed on them. The harder they try to satisfy everyone the quicker the money will run out.
The best cure for America’s problems is not to further empower an already massive federal government beyond its constitutional limit, but to return to its founding principals. A free people working in self-interested cooperation and a government operating within the limits of its authority promote more prosperity, opportunity and happiness for more people than any other alternative.
[BTW, I wish I could take 100% credit for this post, however in the spirit of full disclosure I must say I plagerized this from various sources].
Joined: November 11th, 2009
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I believe that until our govt addresses the basic structural problems in our financial system of too much debt, we will not have a sustainable recovery. So while the stock market can stay irrational in the shorter term, in the long run I believe it will go back to reflecting the fundamentals of our boom and bust economy. And that’s why I continue to feel that for long term investors a better portfolio allocation is in cash and gold. I think the gold price will continue to rise due to a lack of faith in central banks’ policies and in fiat currencies. I recently saw a very interesting articles called Gold Price Up, Dollar Down - Does it Really Matter? which I think is particularly useful for investors to read to get a better sense of what’s going on in the economy and the govt’s role in influencing it.
Joined: September 21st, 2009
Posts: 7
Comments: 89
Right on. Too much debt, too much spending, too much “pork”, too much inefficiency, too much waste, too much fraud, too many hand-outs, too much stupidity, too many politicians and too much brain damage! There I fell better now.
Joined: September 21st, 2009
Posts: 1
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Dependency (on Government) breeds bondage, bondage is slavery.
Joined: September 23rd, 2009
Posts: 16
Comments: 409
Geez, you folks still debating whether CRA caused the crash. Hasnt someone come up with an answer?…LOL
Joined: July 17th, 2009
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elvis says
You must have hit your head. That explains a lot.
Honestly, “Honest” Abe and elvis illustrate the typical mindset found on AM talk radio. In this particular case, if you don’t agree with the discredited argument that the CRA caused the housing crash, then you must support the CRA. If you support the CRA then you are a “lib”. If you are a “lib”, then you want big government and free handouts. Therefore you are an enemy of the state. Do you see how silly these folks are?
I haven’t seen a single post in support of the CRA. Have you? Yet these two carry on as if everyone supports the CRA simply because they don’t agree that the CRA caused the housing crash. I don’t think that George Bush and Dick Cheney caused 9/11, so by their logic that means that I support everything the Bush and Cheney did. See the flaw?
Ultimately they just want to argue and call people “libs”. It’s a free country, and to each his own . . .
Joined: September 18th, 2009
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Nomograph …. I find it interesting that those on the left always cite as the source of all conservative thought “talk radio”, i.e. Rush Limbaugh, et all. I also find it interesting that these very same people on the left almost never listen to any conservative talk radio and typically can’t provide specific examples to back up their assertions. I’m a casual listener to talk radio, but enough so that I know the charges on the left are usually exagerated and unfounded. I personally don’t like Limbaugh, but, have defended him on several occasions with those on the left that write him off as a “big fat liar”. Whenever I have asked for specific examples of his “lies” I am met with blank, empty and silent stares as if they have been confronted with reality and don’t know what to say or do. A typical example is the latest NFL controversy in which Limbaugh was supposed to have said over 10 years ago that “slavery was a good thing”. The fact that this proved to be a complete, and total fabrication doesn’t seem to change anything. They hate him, so therefore, it must be true. Whenever you have emotions that rule and facts are ignored, you typically have liberal “thought”. I was a radical liberal myself but left that simple “touchy feely” thought process about the age of 16. If you can’t back up your postitions by facts, it’s time for you to grow up as well.
Joined: July 17th, 2009
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RayAmerica says
You just fell into the EXACT same mental trap as Honest Abe and elvis: you assume that since I point out the logical flaws in an argument forwarded by AM talk radio show hosts, that I therefore support the opposite side, and therefore I am a “lib”, and so on.
Furthermore, I didn’t mention anything about conservatism. You mistakenly assumed that because you didn’t stop to think. Liberal AM talk radio (and blogs, etc) likely do exactly the same thing. The far right and the far left are almost identical, just two sides of the same coin. Some folks are natural black-or-white thinkers, and they will always end up on one side of the spectrum or the other unless they develop the required critical thinking skill to overcome this natural propensity they have.
Keep trying!
P.S. Anyone care to guess what the flaw in the OP’s CRA argument is? It’s quite obvious, and you don’t have to support the CRA to shoot it down. Mark Levin used this flawed argument to sell Honest Abe a book for $29.95
Joined: September 21st, 2009
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Comments: 89
I’m going to settle this once and for all. FINAL ANSWER. CRA was the root cause of the meltdown.
Big government wants to extinguish the possibility of independent thought, wants uniformity of opinion on all matters, and complete obedience to the state. Prosperity can not survive in a heavily regulated society where everyone moves in lock-step, where inequality is eliminated, and innovation is curtailed by government intervention.
I don’t think the far right are, as you say “almost identical” to the far left. Let me spell it out. Here is what the left wants: LARGER government, MORE socialism, NEW government expenditures, NEW taxes, MORE government control, LESS freedom of choice, MORE abortion, LESS oil, MORE job killing laws, LESS free enterprise, MORE government bureaucracies, MORE government spending, MORE liberal judges, LESS Constitutional constraint, a WEAK dollar, LESS individual rights, MORE business regulation, MORE bad changes, have LESS - pay MORE.
No, I don’t think many right wingers want these things, only liberals do. Am I wrong????
Joined: June 27th, 2009
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FINAL ANSWER: YUP.
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How so?
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elvis says
This is a good example of the way AM talk radio distorts the issues and lies. The radio host will make a statement like yours above about what “liberals” want–”more job killing laws or more abortion” then argue why that is wrong. Their argument sounds great, and is actually true. The problem is that noone really wants those things. It’s a false choice. That’s AM talk radio 101.
Joined: September 21st, 2009
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Comments: 89
Tatupu, thanks for your response. Actually Obama must have wanted more abortion, and he is a liberal, because when he took office, one of the first pieces of legislation he signed helped to advance aid to the abortion industry - committing U.S. taxpayer dollars to foreign countries to pay for abortions there.
And in California, virtually all job killing bills ARE sponsored by liberal democrats. Here are a few. AB 793, AB 943, SB 227, SB 95, AB 1405, AB 2, AB 749, AB 1404, AB 656, SB 602 and 603, SB 145.
I could bore you and describe each of them…and this is just a small sampling - again ALL sponsored by liberal democrats. So actually I think I’m right on this. And by the way, this has nothing to do with talk radio.
Joined: September 22nd, 2009
Posts: 0
Comments: 160
Elvis–
Really? So, do you really believe what you wrote? The bills in CA are designed to kill jobs? That is their purpose? Because that seems to be what you are implying. You really believe that liberals want to kill jobs??
And I believe that Obama reinstated the foreign aid to family planning. Which is a whole lot different than abortion. Again–distortion and half truths. Do you really see the world in such black and white?
Joined: August 12th, 2009
Posts: 11
Comments: 158
One of the reasons California is all screwed up right now is because of the property tax cap.
Homeowners still demand good schools, lots of police, three-strikes-you’re-out prisons, and other expensive items. The government can only raise income and sales taxes, invent new fees, or put alot of cops on ‘traffic detail’. Artificially low property taxes can’t act as a check on home prices, either. The increased taxation makes life harder for businesses and is basically shifting the burden from homeowners, who should have a vested interest in paying property taxes to ensure a good neighborhood, to the general public.
Dependence on Income and Sales taxes ensures that fiscal crises are felt very hard, as revenue drops just when it’s most needed. Property taxes are far more stable source of revenue.
Property Owners should be paying most of the taxes that pay the high costs of maintaining their neighborhoods.
Joined: November 9th, 2009
Posts: 1
Comments: 10
@ Elvis
I agree with most of the things you said, but beg to differ on a couple of points. Bush was for more government spending and a weak dollar.
@ Tatupu70
I came from a third world country, and believe America is heaven. Here are my observations of the two parties. They don’t care about us. They only care about getting re-elected. They wrote laws, regulations and loopholes for corporations and themselves. If you want to get ahead in life, you just have to use the loopholes to your advantage.
The democrats came up with rule and regulations to help the middle class and the poor. They just play the percentage game to get the votes/elected. If anyone wants to run for office in CA, register as a Democrat and more than likely you’ll get elected. But if you’re in TX, register as a Republican.
Here are my conclusions. Americans are nice people. The government meant well when they came up with laws and regulations to help the middle class and the poor, but of course, they forgot the “law of unintended consequences”. That’s why I am against big government. I am for lower taxes., strong dollar, and all of the stuff Elvis mentioned above. I am against subsidies. If the government removes the interest and property tax reduction, home prices will drop over-night. In the mean-time, enjoy the write-off.
I agree with most of Patrick’s analysis about home prices in the Bay Area, but he’s missing one big point in his analysis, that’s why he’s still renting. For those who have figured it ou. I hope you’ll make a lot of money in your home and your investment in real estate. For those who invested during the bubble and lost money, I am sorry.
I think 4X is smart and articulate. I hope he owns a home, too.
Joined: June 27th, 2009
Posts: 1
Comments: 59
Sorry Elvis,
Thought you just wanted a final answer. As I pointed out in a prior post, the law (Yes the CRA law that actually has words, written words that anyone with a web browser can find) specifically states the credit needs of the community must be “consistent with the safe and sound operation of such institution.” It is re-iterated in the Federal Regulations interpreting the law: Lending to low and moderate income is to be done in a “safe and sound manner.” (More of those silly quotes from the actual Regulation.)
Sorry, I fail to see the provision in CRA or its Regs that says, “make bogus loans with no documentation of income or loans using teaser rates that will expire knowing full well the people will not have the income to pay off the loan.” May be I missed it. But, that seems to be the opposite of “consistent with the safe and sound operation of such institution.”
There was a failure of government to reign in the banks, but that still exists today. Goldman Sachs bonuses.
Last time I left open the question of what happens if a bank gets a poor rating for serving their community. Are they shut down? No. Do they have to pay a fine? No. Are their CEOs carted off to jail? No. Then, what? Well, here is the big scary punishment:
Their rating (poor or otherwise) will be TAKEN INTO CONSIDERATION when the bank applies to open a new branch (limited to those that accept deposits and yes there are bank branches out there that do not accept deposits), wants to move their headquarters, want to do a merger or acquisition, or charter a new institution. OMG, nothing happens to them unless they want to grow and, if they want to grow, the poor rating will not necessarily stop them because it’s only a “CONSIDERATION.” Not an absolute denial, not a determining factor, not even a slap on the wrist. Read the law and weep for them. Or just frakin read the law.
So let’s say own a bank making modest profits and you are happy with your profit margin and size. 1) You probably are serving your community as opposed to trying to drain them of every penny. But, 2) you could probably ignore the law altogether. In reality, CRA and its regulations treat small banks different than large, but that is another discussion.
Or we could stick with my short answer: Yup.
Joined: July 17th, 2009
Posts: 4
Comments: 98
elvis says
It sounds as if you are getting frustrated because your arguments are so easily discredited. Maybe you need to pack up your toys, get out of the sandbox, and go listen to a few hundred more hours of AM talk radio
Joined: September 23rd, 2009
Posts: 16
Comments: 409
elvis says
I think what you have done is summed up the ideals of both parties, they are one and the same today. Republicans are no longer conservative and Dems are no longer liberal.
Ronald Reagan removed regulations of the S&L banks which led to the crisis of 1989..he is a Republican
George Bush Sr. bailed out the banks during the S&L Crisis…he is Republican
George Bush Sr. drafted the GLB act in 1990…he is a Republican
Bill Clinton signed GLB into law…He is a Democrat
George Bush Jr. sent us to war with the use of our socialist military…He is a Republican
George Bush Jr. increased social spending by 30%…He is a Republican
George Bush Jr. signed no child left behind…He is a Republican
Obama bailed out the banks, auto industry…He is a Democrat
Obama signed the American Recovery act, which 5-10 Republicans voted for…he is democrat
Obama is pushing for universal healthcare…He is a Democrat
Congress approved an extention of the 8k tax credit….both parties
Both conservatives and liberal strategist agree that social programs are necessary part of government but they disagree on how much of it we need. I believe we need to get these programs reformed under Toyota’s lean manufacturing concepts which mandate a reduction in the 7 wastes. However, it would be counter productive as the government employees only know one thing…spend as much as you can because if you dont, you wont get it next year.
Social programs are a necessary service that should be provided by every government. Let me know how many of the following programs you believe we could do without:
Social Security
• Medicare/Medicaid
• State Children’s Health Insurance Programs (SCHIP)
• Police, Fire, and Emergency Services
• US Postal Service
• Roads and Highways
• Air Travel (regulated by the socialist FAA)
• The US Railway System
• Public Subways and Metro Systems
• Public Bus and Lightrail Systems
• Rest Areas on Highways
• Sidewalks
• All Government-Funded Local/State Projects (e.g., see Iowa 2009 federal senate appropriations)
• Public Water and Sewer Services (goodbye socialist toilet, shower, dishwasher, kitchen sink, outdoor hose!)
• Public and State Universities and Colleges
• Public Primary and Secondary Schools
• Sesame Street
• Publicly Funded Anti-Drug Use Education for Children
• Public Museums
• Libraries
• Public Parks and Beaches
• State and National Parks
• Public Zoos
• Unemployment Insurance
• Municipal Garbage and Recycling Services
• Treatment at Any Hospital or Clinic That Ever Received Funding From Local, State or Federal Government (pretty much all of them)
• Medical Services and Medications That Were Created or Derived From Any Government Grant or Research Funding (again, pretty much all of them)
• Socialist Byproducts of Government Investment Such as Duct Tape and Velcro (Nazi-NASA Inventions)
• Use of the Internets, email, and networked computers, as the DoD’s ARPANET was the basis for subsequent computer networking
• Foodstuffs, Meats, Produce and Crops That Were Grown With, Fed With, Raised With or That Contain Inputs From Crops Grown With Government Subsidies
• Clothing Made from Crops (e.g. cotton) That Were Grown With or That Contain Inputs From Government Subsidies
Joined: September 23rd, 2009
Posts: 16
Comments: 409
Nomograph says
I agree, but also believe that we should try not to engage each other negatively as both parties want us to infight against each other. This is how they get your vote, divide and conquer. In this case, liberals vs. conservatives.
This is not a conservative vs liberal issue..both parties vote for the same things that Elvis is speaking of.
Joined: September 23rd, 2009
Posts: 16
Comments: 409
E-man says
I am waiting for home prices to show a steady 6mos to 1 year of stable prices before I move to purchase. Even then, I might wait it out because I will only lose 3-5% on the home price. I think this is better than buying now and risking a loss of 25-50% in equity, then having to wait it out 10 years because I cant rent the place out at the cost of the mortgage. I dont think CRA is the cause of the bubble, it was simply all the alt-A loans (interest only, second mortgages, etc.) that were floating around that allowed families to buy homes which they could not afford. Gramm-Leach-Bliley loosened the restrictions and allowed mergers to occur.
Joined: September 23rd, 2009
Posts: 16
Comments: 409
@everyone
Conservatives want to blame CRA because in their minds our countries issues are always the result of government attempting to help the poor. Both Liberals and Conservatives were eager to sign GLB because they thought it would create a ownership society, reverse the effects of the S&L crisis of 1989. Truly the root cause of the bubble is the S&L crisis of 1989…which resulted from Reagan removing restrictions on the S&L banks in the 1980’s. Bush Sr. and Clinton cleaned up that mess by enacting Gramm-Leach-Bliley.
This bubble is actually the result of another failed attempt by Republicans to remove regulations on businesses. Here is how I see our political system:
1. Republicans = corporations/war = willing to eat their young for $$, more than willing to put the American worker out on the streets, and definitely willing to engage in senseless wars
2. Democrats = social welfare = anything goes (homosexuality, abortion, etc.) as long as you vote.
I am voting for the bull moose party during the next election cycle, I cant figure out which is worse: Corporations that want to do away with the American worker or sponsored abortion.
Joined: September 21st, 2009
Posts: 1
Comments: 53
Let me in here! All laws have negative unintended consequences. Laws aren’t DESIGNED to kill jobs - but many do as a result, not as the intention. Think about this: laws in general reduce freedom. More laws, less freedom - just a thought.
I really liked E-Man’s view of American politics. Thanks for your simply stated observation of Dem’s, Repub’s, and Gov’t in genreal. You got my vote.
Ryan, its a contradiction when CRA says “meet the needs” (of neighborhoods or people with NO money and NO credit) but “do it in a safe and sound way” HaHaHa. It can’t be done. Its government double talk (newspeak). The threat was the INABILITY TO EXPAND INTO OTHER PROFITABLE LINES OF BUSINESS IN THE BIGGEST BOOM IN THE LAST 75 YEARS,,, thats all. Don’t even mention they made up front money for doing bad loans, so why should they care? CRA was like any other law, it had unintended consequences - like in this case - a nationwide housing meltdown.
4X YES !!! Well stated. Putting together what you said with what E-Man said means AMERICA NEEDS A THIRD PARTY. America also needs SINGLE term limits, no more career politicians.
Joined: June 27th, 2009
Posts: 1
Comments: 59
Honest Abe,
First, it can be done. Takes a little brain power, patience, sense of community, forbearance, self control (especially when it comes to greed). It has been done. There are plenty of small to medium banks that did not involve themselves in greedy gambling and, while still feeling the pain of recession, are still safe. Guess what, they too are governed by the CRA and its Regulations. It is not rocket science here. We are not trying to build a system to produce miniature point singularities (black holes) although we are on the cusp of being able to do so. If we can fly a man to the moon, split the protons and neutrons into quarks, create drugs vaccinate against swine flu, then we CAN meet the needs of the community in a way “consistent with the safe and sound operation of such institution.”
The ability to do something and the desire to do it are two different things. Large Banking institutions could have met the requirements of the CRA to maintain “outstanding” or “satisfactory” ratings had they been planning for long term stability and steady profit over time (interest over 30 years on vetted mortgages). At the same time, they could have kept their steady income stream to hedge their risk in providing loans for low to moderate rental housing. Instead, Large Banking institutions decided to go gambling for high short term profit by making their fees on the front end of loans over and over again.
The government failed to reign in banks and regulate mortgage backed securities (which essentially shifted risk from the loaning bank to investors, which included banks). But, no one, not even the government forced Large Banking institutions to go gambling. If the CRA had not existed, banks could still place short term profit over long term viability.
Your over generalization of the consequences of a poor CRA rating shows that you have failed to actually read the law and regulations. I summarized them for you in my prior post. There is no section that says banks would not be able to expand into other profitable lines of business (whatever you mean by that). You’re most likely referring to the possibility that a merger, acquisition, or opening a new deposit branch POSSIBLY COULD be denied. Couple of questions for you:
1) Is it possible for a bank to grow a profitable line of business without merger, acquisition, or opening new deposit branches?
2) You make a lot out of the Clinton era “threat” to use the CRA penalties. How many times was the CRA penalties used before Clinton took office? How about after?
Please be a little more Honest Abe.
Joined: September 23rd, 2009
Posts: 16
Comments: 409
Ryan says
Yeah abe, everyone needs to quit trying to blame everything on poor people. **SARCASM**
Its not their fault they bought more home than they could afford. Reinvestment back into lower economic communities had nothing to do with it, it was all the crooked alt-a loans that were given out to these people and the 3.5% interest rates given out by FHA that allowed these people to get in to far. I was poor at one time when I left my parents home, but with time I worked my way out of that situation with FHA, SALLIE MAE loans. I think I used the system the right way and didnt attempt to take advantage of the programs like most do. I also have never filed unemployment, but am looking forward to the day where I will need that cushion too! When I was poor, I felt the way to get out was with a college education, and guess what….it really worked!!!!
Smile when you type your response, we are all in this together! and have the same frustrations.
Joined: September 21st, 2009
Posts: 1
Comments: 53
Ryan…the ONLY way to get low income people into a house is to manipulate how people “qualify”. For example, create a loan with nothing down, next to nothing down or better yet, 105% financing. Low income generally do not have much savings, so that will help. Next, create “liar loan qualification”…thats where the borrower is simply asked what his income is - BUT NOT VERIFIED. Low income people generally do not have 3 X’s income vs. mortgage payment to qualify. Next, create “teaser rates” - artifically low “introductory interest rates” because otherwise low income people couldn’t make the payments, even though they were “qualified” for the loan. By making these type of loans the banks were in compliance with CRA and were happy to do so because they made money, up front, AND because they were in compliannce with CRA they were able to move into other lines of profitable businesses which they would not otherwise been able to do. EVERYBODY WINS (so far).
Because of these types of loans, and other manipulations of the normal mortgage process, low income people could now “afford” to buy a house. Now MILLIONS of people who were otherwise unqualifed could purchase a home. The law of supply and demand caused prices to skyrocket. Borrowers in higher priced areas began to take advantage of these loans and other types of “creative financing”. Now even more buyers flooded the market pushing prices even higher. People’s home equity artifically grew larger and larger. Many borrowed against their homes. Some took lavish vacations, others bought rental property, many invested in commercial property. EVERYTHING LOOKS GREAT (so far).
Prices finally got so high that they began to implode upon themselves (for the very reasons Patrick says now is not a good time to buy). Teaser rates begin to expire…many begin to struggle, some begin to miss making payments. The pain continues as a flood of forclosures hit the market. EVERYTHING DOESN’T LOOK SO ROSEY ANYMORE (another failed government experiment going down in flames). As millions of forclosures hit the market, prices take a nosedive. The pain is not confined to just to low income neighborhoods and low income people. The cancer which began as CRA had spread to all types of borrowers and neighborhoods, yes, even to commercial real estate.
NOW THINGS LOOK EVEN WORSE. Middle and high priced homes drop in value and forclosures begin to show up there. People’s equity declines. People don’t feel as well off as before. People stop spending so freely. Business sales slow down. Businesses begain to fail. Commercial real estate is now faultering as a direct result.
OH CRAP, NOW THINGS LOOK TERRIBLE, and the worse may still be ahead for us. How did this happen? Where did this all begin? Despite all of the wonderful arguments to the contrary - common sense and following the pain backwards……. leads RIGHT BACK TO CRA. The law of cause and effect still works.
Simply put this is a result of intrusive government interference into the free market, where it had no business being in the first place. Yet another clear example of the government “trying to help”, with the result being exactly the opposite. Of course the government takes NO RESPONSIBILITY for the mess they created. They point their finger, and claim “it wasn’t us”…..IT WAS THOSE PREDITORY LENDERS!!!!!!! HaHaHa, how pathetic.
Joined: September 22nd, 2009
Posts: 0
Comments: 160
@Abe
That’s a nice story and someone who doesn’t know better might believe it. The problem is that people who come to Patrick do know better.
Again–if this all started because of the CRA, then why didn’t the foreclosures start in CRA neighborhoods? If it was a “cancer” that spread out of the inner cities, wouldn’t there be evidence of this with the foreclosure rates?
Ryan is 100% correct in his explanation. This was a “free market” breakdown, plain and simple.
Joined: September 21st, 2009
Posts: 1
Comments: 53
Tatupu, I disagree with you, again. People who “don’t know better” are the ones who blindly buy what ever government or the politicians are selling, along with their lies (might as well call it what it is) and their shadow statistics.
The free market never breaks down. Gravity doesn’t “break down”, water moving downhill doesn’t “break down”, electricity seeking the least resistent path never “breaks down”. Just as there are laws of nature, there are laws in business. Things that “progressives” choose to ignore or discredit or interfer with.
The free market becomes disabled ONLY by government interference. Willing buyer, willing seller, supply and demand, people wanting to pay the lowest possible price, free competition between businesses forcing prices down, etc. That is the free market, and those are good things for both individuals as well as for America.
When politicians and their countless failed experiments, good intentioned laws, rules and regulations finally crush and collapse enough segments of the economy, guess what happens? A recession. A recession is that period of time it takes the FREE MARKET to correct the mistakes made by the politicians.
A current example, of course, is the price of houses. Through enough government manipulation and implementation of laws, rules, and regulations, the gutting of the normal safeguards of safe lending practices, etc. eventually CAUSED the real estate boom. Its the free market that stepped in (willing buyer-willing seller…..oops - no more willing buyers, the prices are too high). The free market is now correcting the mistakes make by CRA and all the other government mandated laws that interfered with the free market and normal business practices in the first place.
What is happening now is not a breakdown of the free market. Its a clear example of the free market exerting itself, and correcting prior (government) mistakes.
There is another good site, along with Patrick.net that you might want to check out, www.dollarcollapse.com You will find points of view from many credible sources that may help in your understanding of the governments role in our economy.
Joined: September 22nd, 2009
Posts: 2
Comments: 288
Wants 4/2 for $170K in 95341
@tatupu,
I am sure you posted the link before, but would you mind putting up the link to the section of the CRA that shows it to only have effect inside of certian boundries, and how it will not have effect outside of those boundries. It may be that the CRA was “intended” to only be used under specific guidlines, but instead it infected all of the lending world. Is that at all possible, tatupu?
@Abe,
I am pretty sure that the gov intervention and nanny state attitude exibited by the CRA is EXACTLY what allowed the housing market to expand so rapidly. I have no idea why liberal minded (not a put down, just an expression) people defend the CRA so agressivly. Do you?
Joined: October 24th, 2009
Posts: 2
Comments: 43
Honest Abe says
That’s just not what happened. You are confusing and Prime & Subprime borrowers and banks with Subprime pseudo lenders.
The vast majority of subprime loans leading up to and during the boom were not made by banks or through FHA, they were made by companies like New Century and Saxon Mortgage. Most of those companies didn’t even exist until the late 90s. They got into the game (lending) because there was huge opportunity for profit. Subprime borrowers were sold on 2 year teaser rates (and weren’t really given other options) because that virtually guaranteed lenders repeat business when rates started to adjust. The teaser rate subprime loans were a big factor in driving up values in the first place; they weren’t made in response to higher values, they caused higher values.
There were some “liar loans” (stated income) made to self-employed subprime borrowers. But the vast majority (non self-employed) had to fully document their income. The abuses in the Alt-A (No Doc Loans) took place among prime borrowers, not low income sub-prime borrowers.
Joined: September 22nd, 2009
Posts: 2
Comments: 288
Wants 4/2 for $170K in 95341
iggyman says
wouldn’t it be great if the IRS looked at the stated incomes of those now defaulting due to fibbing on thier loan docs and jailed all those that commited fraud? Or, made them pay the income tax that matched their stated income? That would be cool!!
Joined: September 22nd, 2009
Posts: 0
Comments: 160
@BAP
Here’s a good site to learn about the CRA
http://www.ffiec.gov/cra/
excerpts:
“The Community Reinvestment Act (CRA), enacted by Congress in 1977 (12 U.S.C. 2901) and implemented by Regulations 12 CFR parts 25, 228, 345, and 563e, is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate”
or http://www.ffiec.gov/cra/pdf/cra_guide.pdf
Specifically, scroll to page 16 where it talks about MSAs(metropolitan statistical areas), CMSAs, PMSAs, etc. Lots of talk about geography. They even have a computer program that will help you determine if an area is covered by the CRA it looked like.
Hope that helps.
Joined: September 22nd, 2009
Posts: 0
Comments: 160
Joined: June 27th, 2009
Posts: 1
Comments: 59
Honest Abe,
I see your diatribe fails to answer even the first question posed. You are hung up on “other profitable lines of business.” A phrase that no one but you can put any meaning to since it is not in the CRA or its regulations. But, let me help you try to think about it. Can a bank begin to buy and sell mortgage backed securities (presumably a new line of profitable business) without opening up even one new deposit taking branch, without acquiring even one company, or merging with another bank? Hint: The answer is yes. It takes shifting existing resources from less profitable lines of business and beginning a new line of business. Sure it is not as quick to show paper profits as merging or acquiring, but it can be done and, it can be done while ignoring the rating under CRA. If you would like to explain what you mean by other lines of profitable business, I’ll be more than happy to tell you if it can be done without worrying about the CRA rating. Of course, you may think being ubiquitous and vague works to prove your point. It doesn’t, but I certainly don’t begrudge people wanting to live in LaLa Land holding hands, singing Kumbaya and drinking Coca Cola.
Your first paragraph actually touches on the root of the problem. It was THE BANKS CREATING no-doc loans and sub-prime loans. The CRA did not require them to create these loans. CRA did allow them to be used in the government’s evaluation and ranking, but then again Large Banks could use just about anything to influence the evaluation and ranking, including using credit loans that had absolutely squat to do with housing (rental or purchased). Again, try reading the law and it’s regulations, they are available to the public. This brings us to the next point. Your continued focus on housing purchases shows that you simply do not want to acknowledge that banks, in providing for the credit needs of the low and moderate income did not have to make loans directly to the low and moderate income households. They could have made loans to big apartment complex investors so long as the housing included low to moderate income families. But, again greed, big bank greed, dictated there was more short term profit to be made in fees on loans directly to low and moderate households, especially when they could turn around and sell the mortgage to investors as an MBS.
But, the banking failure was not in making loans to low/moderate income households. It was in how they off set risk. Instead of off setting risk by balancing their portfolio of risky loans and less risk loans (prime), they transferred risk to investors. Realizing they could make even more in profits, they kept doing it.
Banks did not have to create this short sighted profit model. In fact, up until banks could simply dump their risk on to investors, they had every reason not to do this. And, this greed, which admittedly the government left unchecked, Honest Abe is the cause.
Oh yeah, free markets (as you know them) do not exist without government. There was a movie out a few years ago that came fairly close to capturing a snapshot of a free market. It was called Pirates of the Caribbean. The pirates, not the colonial government. Good luck to you if you think you can survive (and I mean not get killed) in a free market where there is no government. I’m a fairly good shot with .30-6 (30 yat 6), a bow, and even trained in Kendo and I wouldn’t want to try to raise a family in a free market with no government intervention.
Joined: September 22nd, 2009
Posts: 2
Comments: 288
Wants 4/2 for $170K in 95341
@Ryan,
what was the change that allowed/made banks lower borrower qualifications, in your opinion? And why did that change happen? Thanks.
Joined: September 22nd, 2009
Posts: 0
Comments: 160
@ bap
I know you asked Ryan, but I’ll put in my two cents. Once mortgages were bundled into securities, then the craziness began. And greed took over
Joined: October 24th, 2009
Posts: 2
Comments: 43
tatupu70 says
Precisely. As Ryan points out, securitization allowed lenders to transfer risk to investors, and get paid for it. This changed their fundamental incentive from making loans that would actually get paid back, to making as many loans as possible to sell to gullible investors.
The lenders knew how crappy the loans were, but the investors thought they were buying AAA rated securities.
Joined: August 12th, 2009
Posts: 11
Comments: 158
And the Fed Funds rate set lower than inflation for years gave banks free money to speculate with.
Joined: September 22nd, 2009
Posts: 0
Comments: 160
iggyman says
This is the only thing I question because so many of the banks had so many bad loans on their books too. Was it just a timing issue that they couldn’t unload them before the shoe dropped? Or did bankers also get swept up into the frenzy?
Joined: October 24th, 2009
Posts: 2
Comments: 43
@ tatupu70
I think it was both, but mostly timing. When the music stopped lenders were stuck holding a bunch of bad loans. Remember how suddenly things came screeching to a halt. In Feb 07 New Century - then the biggest of the sub prime lenders - went under. From there it was a domino effect. Investors started to look more closely at the mortgage backed securities and realized they had absolutely no idea what it was they bought. They literally did not understand the business they had bought in to.
They caught cautious (smart) in a hurry, and lenders no longer had anyone to unload their paper to. By the end of 07, nearly all of the sub prime lenders were gone (hundreds of them) and the Alt A guys weren’t far behind.
Joined: September 22nd, 2009
Posts: 2
Comments: 288
Wants 4/2 for $170K in 95341
@tatupu,
I clicked, and I read. I also read your point about bundles. So far though, you have not pointed to something and said, “THIS right here is what allowed the loan makers to increase exposure of depositors without fear of legal action for reckless lending.” You see, in my little mind, I can’t help but see the connection between the gov (I say “forcing”, you say “allowing”) banks to expose depositor’s funds to be handed out to less-than-qualified home debtors and the explosion in the number of how-much-a-month buyers …. and other bubble causers.
Tatupu (and anyone else who would like to) please, finish this sentence: The Bank’s commonly expected loan standards were reduced from 20% down and 30% DTI ratio in the approx year (1)________ by way of (2) ______________ and this (allowed, incouraged, resulted in) more bad loans to be made. Before (2’s answer) had happened, the banks did not give out bad loans because (3)__________________.
Please tatupu (and everyone else who wants), I would like your opinion by filling in the blanks of that plain, simple, sentence. Numbered 1,2,3. Thanks.
Joined: October 24th, 2009
Posts: 2
Comments: 43
@ Bap33
First, many lenders, especially sub-prime lenders, were not banks. They didn’t have depositors, only borrowers and investors. Second, there isn’t really a single, easy answer. Part of it was ‘financial engineering’. FANNIE & FREDDIE in particular started to rely on computerized underwriting and statistical modeling of risk instead of commonsense, tried and true underwriting practices. Investors were sold on ‘collateralized debt obligations’, another innovation by the financial engineers who thought they could make 2+2 equal 6, then 10, then whatever they wanted it to. People bought into it because they didn’t want to admit they had no idea what the brilliant young Harvard (or Yale, or whatever) grads were talking about. But to answer your question in general terms:
1) 1998ish
2) secuitization and the ability to pass risk down the line
3) They didn’t have the ability to pass risk along. They made their profit from interest earned from loans that they made. If the loans didn’t get paid, they lost money.
Joined: September 22nd, 2009
Posts: 0
Comments: 160
@BAP–
It’s not the government’s job to check on bank’s loans to make sure that they good. Banks are a private business and can be run however they like–within certain basic rules such as reserve requirement, etc. If a bank wants to make a reckless loan, then it is their perogative. Obviously the bank owners would prefer this not happen as they will stand to lose all of their investment.
I’m surprised you can’t follow the scenario–Mortgages were securitized and sold to investors. This created huge demand. The lending standards were slowly eroded to try and meet the demand. It wasn’t like there was a memo put out by all banks saying from this day forward lending standards are reduced. It happened over a period of time. As the crappy loans were bundled and able to be sold, more were made and lending standards were further reduced. etc, etc.
To answer your questions–1. probably standards kept getting looser from 2002 - 2006 ish. No data to back that up, just my guess. 2. securitization of mortgages 3. they couldn’t sell them to investors.
Joined: September 22nd, 2009
Posts: 2
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Wants 4/2 for $170K in 95341
I see your point. And Iggyman’s differentiating banks and lenders is helpful too. And the date’s can be argued, but they are pretty close … I guessed about ‘98 something had to change in the loan creation world. So, the walstreet outlet removed the risk for returns based on re-paid loans to a “futures” based return based on walstreet style / junk bond games? I see what you are saying. But the ability to remove risk went father than just off the bank/loan creators backs to investors. B. Frank let the banks/lenders know that Fanny (ran by his lover at the time) would back everything they were writing in subprime loans, and this moved the risk unto taxpayers, leaving investors sitting pretty. Right?
Well, I have no problem with your position. I can easily say that CRA did not do the function it was intended to do, and thereby avoided being the catalyst for the bubble that it would have been, had it been more effective. But, I still have it in my hard head that gov fingers in the pie were hooked to left-hands, not right-hands, when it came to manipulating loan qualification guidlines. I agree, right-hand fingers went hunting the easy money too, but the first finger was on a left hand. lol. Does that make sense?
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Iggy, I couldn’t help but notice you stated earlier that CRA loans had “full income documentation.” Right, on loans with nothing down and an artifically low teaser rate for 18 - 24 months, haha. There’s no security for such a loan. With CRA, banks were lending to people who normally would be rejected as poor credit risks.
I heard today that blacks and latino’s were three times more likely to loose their homes. These are specifically the people that the government wanted to help (by creating the CRA).
Every country needs a government, but it shouldn’t be too little or too big. In America, it has already gotten too big, too intrusive, too expensive and too controling…a nanny state. Centralized government always ends in disaster. What would help our country is not more government, but limited constitutional government operating within its lawful authority.
The burden of our staggering national debt will fall on our children and grandchildren. What will you say when one of them asks you “Grampa, did you try to stop the financial burden from falling on us?” “What did you do to help?”
Joined: October 24th, 2009
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@ elvis
Actually, I said that most sub-prime borrowers were qualified with full income documentation. I didn’t say anything at all about CRA. I will say this though, if you had asked 10 CEOs of the biggest sub-prime lenders in 2005 what they thought about CRA, 8 of them would have told you they had no idea what CRA was.
They lent to sub prime borrowers because there was profit in it. They used 2 year teaser rates because it increased their profit. They knew that after the two year teaser period was up, most borrowers would have to refi into another sub-prime loan. Lenders had borrowers on a tread mill, and they liked it that way. CRA had nothing to do with it.
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@elvis–
That’s the point. CRA loans weren’t nothing down and artificially low teaser rates. Those loans were made primarily on new construction in wealthier areas.
elvis says
Really–do you have any evidence to back that up? Because that’s not what I’ve read.
elvis says
You heard wrong.
elvis says
I’ll say I voted for the candidate who promised to stop the war in Iraq. And cut out the waste in the military industrial complex.
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I think a huge factor is being missed here; and that is that the lenders and all involved thought their liberal underwriting, appraisals, etc. would be covered by a continuing appreciation in housing. Loans that were marginal would have equity infused IF properties continued to appreciate. Also, Fannie and Freddie KNEW the Federal Gov’t would bail them out if things turned sour, and guess what? …. they did. Fannie & Freddie were processing an unbelievable 85% of all loans bundled and sold on the secondary market. The whole bubble burst when the appreciation ended and exposed the entire system for what it was, a system being fueled by hope and air. I still contend that Obama, et all are doing the very thing they shouldn’t do, which is pumping more air into the bubble (via tax credits) which will only bring another huge phase of collapsing prices along with more foreclosures.
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They don’t see it that way. They see themselves as pilots gliding a dead aircraft down, and if they are clever about it the plane will land in the water without breaking up and everyone will get off. Seriously I think that’s how they think. There’s a large helping of “we are just doing this to make things stable for now, later we will FIX the system.” Of course we will NEVER get around to fixing it, because the broken parts benefit people who don’t want it fixed.
Joined: October 24th, 2009
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@ RayAmerica
They certainly behaved as though values would appreciate forever, and maybe some of them (lenders) actually believed that. But there were certainly people in lending that knew it couldn’t last. The end result was just too obvious when you looked at the types of loans that were being made.
@ Vicente
I see it about like you do. But did you happen to catch any of Bernanke’s speech today? He said - twice - that recovery is slow in part because securitization isn’t coming back quickly enough.
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Bap33 says
Yes it would, but that would only add to the negative outlook of the program now wouldnt it?
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Honest Abe says
I think JUST ME gave you all the facts you need, I find it quite silly how conservatives want to blame poor people then want to put in place a puppet name Michael Steele to gain their following. You will have to do more than that to gain the votes of the poor, impoverished minorities…
You will have to stop blaming them for your problems. It is easy to decipher between conservatives and liberals on these threads….Conservatives always display ill will and intent toward any legislation that targets poor communities.
You should take a close look in the mirror and realize we are all poor when compared to the board members of the company you work for…unless you maek over 250K.
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RayAmerica says
Agreed, it will wind up being money lost on people who simply buy homes using emotion and not on the basis of good business sense.
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justme says
I agree, none of these programs had anything to do with GLB which opened the floodgates for ALT-A loans. There are a bunch of false conservatives on the thread attempting to blame poor people…
These are the bunch of bitter individuals that Obama was speaking of, I truly do not believe they have any concern for the conservative movement. What matters most to them is that as long as poor people and minorities are on the other side…they will vote the exact opposite and oppose any common sense ideas.
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Wants 4/2 for $170K in 95341
4X,
what amount is “poor”?
Joined: September 21st, 2009
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Attempting to blame poor people? They, and many others, suffered as a result of the housing meltdown. They wern’t to blame - government intervention was to blame. Thats the point of this whole thread.
In case no one noticed, where is it written that its the governments job to raise the percentage of housing ownership in America??? In case no one noticed, look at the disaster that was caused by governments intervention in the housing market. Virtually every government agency and program ultimately causes prices to increase. Fanny Mae, Freddy Mac, FHA, CRA (the ignition source) etc. Its a toxic cocktail that caused housing prices to skyrocket, a housing bubble and its resulting collapse. If that isn’t bad enough, add the total cost to the taxpayer to maintain the army of employees, the rent’s, the retirement costs, etc, etc, etc.
Big “helpful” government is a costly mistake…and we’re all paying the price. I like the idea of voting for a candidate who would stop the war - but only if that same candidate wouldn’t promise a whole list of other socialsitic goodies to the voters. Financially America can’t stand more debt.
Google: IOUSA.
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Honest Abe says
So where is it written only the elite rich should be afforded home ownership?…just because you and I are priveleged enough to own doesnt mean we should exclude others from the American Dream.
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Wants 4/2 for $170K in 95341
how much is rich? poor?
slow people should run the 100 at the olympics in your world too, right 13X?
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Bap33 says
I would refer to the rich corporations that run our nation using greedy methods. Poor people would be anyone that cannot put a roof over their head, food on the table and love in their hearts. Even the slow people as you call them, have an open playing field in which they can attempt to compete at the Olympics. With hard work, slow people can learn to run fast. If I were to correlate this for you, this means that poor people should be afforded the opportunity to purchase within their means in areas where their incomes meet the price ranges.
In comparison to my recent purchases of 1.5 million, 2.3 million, anyone that would buy a home for 170K would be poor….
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Wants 2/2 for $300K in 98225
This is one of the few blogs I’ve seen do a FPP on georgism, which IMO is the only answer to the above questions about wealth and poverty.
Henry George’s book, Progress & Poverty, was a runaway bestseller in the late 19th century, and was written to describe the serial nature of land booms and poverty among those who do not own land.
Before discovering it in late 2003 I was living in the Bay Area and was befuddled by LLs raising the rents on everyone during the dotcom rush, most of them profiting on fully depreciated property. Without the three-factor analysis of George — that Land, Labor, and Capital are separate and distinct, I lacked the critical element to see the fundamental flaw of our post-Prop 13 system, and that there was a third way between it and the non-optimal if not outright disastrous “Socialist” central-planned economies. Henry George was no friend of the Socialists of his day.
I have no moral problem with wealth accreting to wealth via capital risk. I do have a problem with wealth accretion due to profiting from outright ownership of natural resources, that which was not produced by labor.
So much of today’s economy is outright rentierism. That the british banks even had a term for this, “buy to let”, sickened me when I heard it but now brings nothing but schadenfreude.
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Wants 2/2 for $300K in 98225
Financially America can’t stand more debt.
Google GINI.
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Wants 2/2 for $300K in 98225
The whole bubble burst when the appreciation ended and exposed the entire system for what it was, a system being fueled by hope and air.
And increasing wages from the 90s, the 2001-2003 tax cuts, lower interest rates, de-facto increased leverage via SISA/NINJA, and the rise of IO, negative amortization up to 120%. All those got the ball rolling 2002-2004, and the speculative element kept it going into overshoot 2005-2007.
It only hit me a couple of years ago that land values put all of us on a treadmill. Given that land is fixed in supply and demand is unbounded if not infinite, the cost to acquire the land ownership privilege will always be maximally expensive relative to area incomes/purchasing power.
It has always been this way. The richest private landowner in the US — Robert Morris — was thrown into debtors prison in the late 18th century due to massive failure in land speculation (he had the right idea but was a bit too early), and every generation since then has seen a boom/bust cycle rip through the economy like the SE Asian tsunamis.
Conservatives bemoan the very low if nonexistant Federal income taxes that poor people are subjected to, without realizing that these low taxes function nearly entirely as rent subsidies to the LLs. Raise taxes on the poor, eg. via mandated health insurance, and rents will HAVE to come down. Can’t get blood out of a stone.
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Wants 2/2 for $300K in 98225
They used 2 year teaser rates because it increased their profit. They knew that after the two year teaser period was up, most borrowers would have to refi into another sub-prime loan. Lenders had borrowers on a tread mill, and they liked it that way. CRA had nothing to do with it.
yup, the parallel is revolving credit card debt. Fixed mortgages suck, the real action was hooking people on more leverage at floating rates.
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Troy says
Check out this site: http://www.housingbubblebust.com/Fed/GDPvsHSG.html
You are one deep thinker.
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Bap33 says
My definition would be households making under 12K per year whose head of households cannot afford the basic necessities (Food, Water and Shelter) and/or are living in substandard conditions. The Democratic party has been known as poverty pimps because they seem to prey on this voter base where as the Republican party seems to show no remorse for the conditions these people live under.
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Clarence - no one has excluded others from the American dream. If you mean people are excluded from buying a home, thats simply not true. ALL buyers, however, do need: (1) good credit (2) down payment, closing costs and cash reserves, and (3) the ability to repay. It is not a requirement that a persons ethnicity even be disclosed on a loan application.
That is precisely why the government interfered with the CRA…to force banks to make loans to those who did not meet normal, prudent lending guidelines by having the three items I mentioned above. How safe would you feel getting on an airplane when you knew for a fact that normal, prudent safety standards had been eliminated (MEANING YOUR LIFE WAS ON THE LINE)?
Troy. America can’t stand more debt. Here is a quote from the Wall Street Journal, Oct 11, 2009: “The cost on the debt repayment on the national debt represents more than 40 cents of every dollar that came in from individual income taxes.” And what do we get for that??? Absolutely NOTHING. Why should our government be allowed to continue to waste “zillions” of dollars on politicians pet projects, pork and bridges to no where? Why should our government be allowed to burden future generations for spending which took place before they were even born? Isn’t that taxation without representation?
Many have forgotten that politicians WORK FOR US…NOT the other way around. It’s long overdue to start supporting individuals who stand for freedom and liberty - like Ron Paul. He represents common sense, freedom, the rule of law, personal responsibility, sound money and a strong DEFENSIVE military.
The two party system is devisive, the politicians like it that way. It keeps people fighting with each other without concentrating on the REAL PROBLEM…which is out of control politicians from BOTH parties.
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Troy - 10 states are broke, several cities have already filed for bankruptcy and Kalifornia is paying workers with IOU’s, haha. Isn’t that a clear example of TOO MUCH DEBT?
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Wants 4/2 for $170K in 95341
@Honest Abe.
I voted for RP. Ross Perot
I also voted for RP. Ron Paul
I guess I’m a rebel. lol
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Isn’t that a clear example of TOO MUCH DEBT?
nah, debt is just deferred taxation.
Not that I think gov’t spending is all that wealth-accreting. Much of it is just spent on sub-optimal crap.
I’m a left-libertarian so I find the current system offensive from many angles.
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Put in another way, the interest alone on the national debt is $1.4 billion PER DAY. If we don’t learn from the past we’re bound to repeat the same mistakes, so listen to this quote: “To preserve our independence we must not let our politicians load us up with perpetual debt. We must make our choice between ‘economy and liberty’ or ‘profusion and servitude.’ If we can prevent the government from wasting the labors of the people under the pretense of caring for them, the people will be much happier.” Thomas Jefferson, 1732 -1826.
Here’s my take on this. (1) “We must not let our politicians load us up with perpetual debt.” They already have, and in fact, they are increasing the debt at an increasingly alarming rate. (2) “If the politicians load us up with perpetual debt we will lose our independence.” Isn’t that EXACTLY whats happening today??? We’re losing our independence, freedom and prosperity. (3) “We must choose between Economy and Liberty - or - Profusion and Servitude.” Politicians are apparently not concerned at all about economy and liberty. Instead they have given us phony profusion and involuntary servitude for us, our kids, and our grandkids. Could that be part of the reason for the anger expressed all over the country this summer? (4) If we can prevent the government from wasting the labors of the people under the pretense of caring for them, the people would be much happier. Well, the government IS wasting the labor of the people under the PRETENSE of “caring for them”.
Our politicians were forewarned of this trouble about 175 years ago, its fallen on deaf ears, and SURPRISE…were in a financial meltdown. Isn’t it time we replaced both the tax and spend politicians AND the borrow and spend politicians and find public servants who would steer us back toward economy and liberty?
For too long I paid no attention at all to politics. Now I know better. I’m going to fight for my kids and grandkids. I don’t want them in involuntary servitude to “the state” as we continue to march directly toward socialism. Silent no more.
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The problem isn’t “politicians” it’s we the people. The teabagger jazz is just blah-blah-blah to me; the dynamics of the situation we’re in are complex and have no simple solutions.
You fill your posts with a lot of keywords like “liberty” and “grandkids” but your rants are really content-free. You are scared by words but apparently lack the capacity to understand the system as it is. Sure, interest is a crushing burden — but one man’s interest payment is another man’s income.
The bottom line over half of the wealth of this country is controlled by a small minority. Until we address this — via “socialism” — we are just rearranging deck chairs.
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Wants 4/2 for $170K in 95341
Troy,
Please cite your example working anyplace, at any time, in history …. without a war or revolution. Ready, go.
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BAP, you asked earlier why some people are so pro-government in the face of turmoil. Truth tellers are viciously attacked precisely because of the validity of their message. Or as Ron Paul says: “Truth is treason in the empire of lies.”
And there are simple solutions, the rule of law is simple, yet disregarded by politicians who will not abide by the law of the land - the constitution. Sound money is a simple solution, but The Fed and the liberal government politicians want to spend us into a black hold with their pet projects and refuse to follow the constitution. Freedom is a simple solution but the government has a sociopathic aversion against it. Government wants, for the benefit of the government,to micromanage every aspect of peoples lives, you know - they want to create a total nanny-state.
It always strikes me as odd that some completly dismiss waste, fraud, mismanagement, debt, irresponsible spending as no big deal. “Sure, interest is a crushing burden - but one man’s interest is another mans income”. The trouble is WE have to pay it back. Some people dismiss others rants as content free yet they themselves offer NO SOLUTIONS AT ALL.
Is that your solution? Socialism is spreading poverty equally amongst everyone. Its been tried countless times and the result is always the same, a lower standard of living, reduced productivity, hunger and social unrest. The harder the politicians try to satisfy the UNLIMITED demands of tens of millions of government dependents the faster the money will run out.
How about some real solutions. Cut spending, lower taxes, sound money, less regulation. WERE HEADED IN THE WRONG DIRECTION - HAVENT’ YOU NOTICED YET? Ugh.
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BAP - my barbs were meant for Troy - not you. I’m on the side of anyone with common sense, like you. Abe.
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=Ready, go.
Norway, Sweden, Finland, Denmark.
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Socialism is spreading poverty equally amongst everyone.
Socialism is a tool. It can be used and abused.
FWIW, as a left-libertarian I only want socialism to the degree that it is necessary to ensure everyone access to that which is needed to become and remain a productive member of society.
Jeffersonian idealocracy can work when there’s half a continent to settle and profit from, but once the land is taken independence and malthusian conservatism will not work over the long run.
I am a hyper capitalist and believe in entrepreneurialism and the profit motive. I also think that established, hereditary wealth is a present drag on progress, if and when it pursues rentierism, for rentierism — speculating in land, profits from natural resource extraction, and abusive skill arbitrage among our professional caste — is simply leeching on the truly productive members of society who are producing through their labor the wealth of the nation.
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The harder the politicians try to satisfy the UNLIMITED demands of tens of millions of government dependents the faster the money will run out.
Money’s not the problem. Wealth creation is. We need to create more and consume less. More doctors. More nurses. More factories. More capital formation.
Less “investment” in real estate, less lawyers, less prisons, less military expenditure, all this is just pissing away our wealth.
The problem with non-governmental approaches is that “private equity” is intensely conservative and prefers the status quo, if not the status quo ante of the 19th century unregulated Gilded Age.
FWIW, I think income and sales taxes should be minimal and taxes on land value and resource extraction be maximal. You give me this & I’ll support your minarchy.
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Wants 4/2 for $170K in 95341
Troy, thank you.
divorce rate / teen-unwed mother rate
Would you share just a few details about those countries, please.
1) immigration laws, and rates of immigration from non-anglo countries.
2) demographic of non-Anglo residences and percentage break-down by nationality.
3) Amount spent on Defense, amount sent out in foreign aide, amount spent on FEMA / or Red Cross type of services.
4) Smog laws / EPA equivelant and cost to maintain.
5) Average number of non-citezens giving birth for free in hospitals over the past decade
6) Increase in non-domestic children in schools / on public aide
7) legal system access
I know that’s alot, but I think the details of your point are very important and knowing the details will help me (and others I think) see the whole picture. Thank you.
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Wants 2/2 for $300K in 98225
I’m not a racist or culturalist and I think everyone, given a conducive environment, can become productive members of society. Scandinavian countries are already non-anglo so I don’t know what you mean by that.
It is true that the nordic nations have the advantage of a lot fewer mouths to feed and a lot more homogenous, common culture extending back into the mists of time to bolster their sense of common community.
The lack of the latter is one of America’s main problems but it’s solvable if we address the underlying problems in the current system, most of them simply economics-related IMO. I don’t hold the eurosocialist nations to be paradises but there’s a lot we can learn from them. America got by on the myths of the wild west and pioneering spirit, but now that all the good land’s taken we have to think more about how we become more productive as a people.
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Wants 4/2 for $170K in 95341
Please excuse my ignorance, I thought “anglo-saxon”(sp) was the correct term for the northern region peoples. What is the proper term for the caucozoidial folks that populate the regions you mention?
You say you are not a culturalist, but you mention the lack of common culture as being a possible issue in America, now that all of the good land is gone. Would the good land include areas outside of America?
Would you please give your best try at putting some numbers to my questions? I did a few searches and have numbers, but they will be slanted in my way, so I would like to read yours first. My point will obviously come from the details of the locations and peoples you suggested we follow, so please do not find offence in my questions. Thanks.
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Wants 2/2 for $300K in 98225
Of course Civilization and economic success depends greatly on parentage and culture in the general but like I said above I am more of a “classist” than a culturist or racist, ie. in any country and people wealth begets progress and poverty begets strife.
Humans are naturally more generous to people who share commonality and naturally suspicious of those who don’t. Americans have been dealing with these issues since we got off the boats 400 years ago, and the nordic/scandinavian countries are now beginning to deal with the friction as more third-world immigrants flock to their socialist safety-net systems. [to answer your question, Anglo-Saxon refers to germanic tribes that ended up in England, first battling the Welsh & Celts, and later invading nordic peoples]
The original question above was about how eurosocialism can be established without violence, and I gave examples of the nordic countries.
I find Honest Abe’s opinion: “Cut spending, lower taxes, sound money, less regulation. WERE HEADED IN THE WRONG DIRECTION” ideologically-driven and not empirical.
Gov’t spending, High/low taxes aren’t the problem, what this money is going towards is the problem. If gov’t spending is accretive — wealth enhancing — then it can assist private enterprise. Same thing with regulation. cf. Bhopal, India and present-day China for the natural state of an unregulated economy, not to mention the topic of CRA and how the financial system was allowed to go off the rails this decade.
http://dorkmonger.blogspot.com/2008/11/cutting-red-tape.html
The top 10% of this country own about two-thirds the wealth. The masses toil for them. In a democracy, something’s gotta give here.
Back on topic, I find the idea of cutting taxes naive in the extreme because it is ignorant of a fundamental feedback dynamic of our economy, that of land prices and disposable income.
AFAICT, every dollar of less taxes will eventually result in a dollar higher in rents and mortgage payments. And the converse is true, too. Every dollar of increased taxes results in lower land values and lower rents.
This is why I think that without taxing land more we will not really stabilize the system that well. The Eurosocialists address the problem sideways by taxing the crap out of everything, but more targeted taxes are in fact possible.
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Troy the 50 poorest countries in the world all have the same symptoms…low income, grinding poverty, restrictive authoritarian laws, hunger and little hope for the future. All have the same ideology, socialism. Socialism restricts or destroys a free market, banishes rewards for economic success has huge, suffocating governmental bureaucracy, punishes production and ultimately leaves the population impoverished. Socialism kills initiative and prosperity (for the common good of course).
America already has what is necessary for everyone to become a productive member of society - its called opportunity. You said Jeffersonian idealocracy cannot work today. There is no connection with what you said and Jefferson’s quote, which began with: “To preserve our independence we must not let our politicians load us up with perpetual debt.” That was accurate, brilliant and prophetic.
Hereditary wealth didn’t seem to be much of a drag on Bill Gates, nor on Google, or Facebook, or Ebay, or YouTube. Hereditary wealth does not negate opportunity. Opportunity allows all an equal chance to succeed.
Create more, consume less - Yes.
More Doctors, nurses, factories - Yes.
Less Lawyers, less prisons, less military spending - YES, YES, YES!!!
The problem with a “governmental approach” is they flat out don’t know what the hell they are doing, and care even less about the negative unintended consequences they create in the aftermath. Plus it opens the door to waste, fraud, mismanagement, misallocation of resources, and corruption…if that’s what you want. You give me that and I’ll support your position about creating more and consuming less, more doctors, fewer lawyers and the like.
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Wants 2/2 for $300K in 98225
The problem with a “governmental approach” is they flat out don’t know what the hell they are doing, and care even less about the negative unintended consequences they create in the aftermath. Plus it opens the door to waste, fraud, mismanagement, misallocation of resources, and corruption…
I certainly agree with this 100%. A people get the government they deserve, good and hard, as the wise man said. Only 20% of this country has their head on straight IMO. If that.
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Wants 2/2 for $300K in 98225
Troy the 50 poorest countries in the world all have the same symptoms…low income, grinding poverty, restrictive authoritarian laws, hunger and little hope for the future.
They also have the commonality of too many ~~~~ people and not enough land. The governmental dysfunction IMO is not a cause but an effect of their poverty.
Hereditary wealth does not negate opportunity
In the general I most certainly agree with you. The injustice only comes from
wealthcrooks acquiring natural wealth and then leasing it out to others who then do the actual work in the system. This is a net drag on equality and advancement and requires 30% or so of our economy to be involved in unproductive tail-chasing of CRE and real estate rentierism.I have no problem with wealth getting returns from capital risk, the Gates and Googles. We all, however, cannot be billg. Someone has to stock the shelves, rotate the tires, and clean the toilets, and these fungible jobs simply lack bargaining power to become anything other than a race to the bottom in any unregulated economy. Quality of life in the eurosocialist systems is IMMENSELY better for the bulk of the people than here in the states. This is not a failure of our people but due to the fundamental feedback of land economy and rife rentierism the masses are subjected to here.
I live and work in Sunnyvale and have seen ZERO black people as peers here since I got here in 2000. Something is fundamentally screwed up in our system. I’m interested in solutions, not ideological bs that didn’t work 200 years ago (hint: Hamilton won that argument) and won’t work now.
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Troy, I don’t want to get into a situation where I try to prove you wrong and you try to prove me wrong. I like being solution oriented. The first step to solution is to be aware that a problem even exists (example: I’m not an alcoholic, I’m a social drinker).
There is no injustice in opportunity, is there? And even though government puts up plenty of barriers - its still possible for anyone to open a modest business, work long hard hours and achieve the American Dream, because the opportunity is still there.
Yes, someone has to stock the shelves, rotate tires, work at McDonalds…those are called entry level jobs. From there people have the OPPORTUNITY to look around and find a better job. Over a period of years they may want to go to night school or start a business for themselves. No one has taken their “bargaining power” in a race to the bottom…and why race to the bottom - why not race to the top? Who is it up to ???
The quality of life is not IMMENSELY better in eurosocialistic systems. I have a close relative who lived in Belguim, near the German boarder for about four years. There is NO comparison - America has far more opportunity and a far better quality of life. He was VERY happy to return to America.
On a visit there, I personally saw a BBC TV report on people lining up for blocks and blocks for dental service. They even slept on the street to save their place in line. If they lost their place and missed their “Window of time” they would have to wait for 6-9 months for their next available opportunity to see a dentist. No thank you. Big government is not the solution. Limited government working within the limit of their authority, accountable to the people is the solution.
That’s whats missing. Its NOT the citizens electing bad politicians…it’s that the citizens are not given a choice. Bush vs. Whats his name (tweedle dee vs. tweedle dumb) McCain vs. Obama - with people voting for “the lesser of two evils.” That’s no choice - both are taking America to the same place. WHERE ARE WE GOING…AND WHY ARE WE ALL IN THIS HAND-BASKET???
By the way…debt does matter. According to the Center on Budget and Policies, “46 states could find themselves in dire budget trouble by the end of 2010.” THATS MOST OF AMERICA !!! And in a report released earlier this week “10 states face “FISCAL PERIL”. You’re a smart guy, I don’t need to tell you what “peril” means. The report went on to say these 10 states make up one third of the US GDP.
Wait a minute, to make matters ever worse the Obama Administration is piling on unprecedented massive amounts of debt on the American people while at the very same time stating that “debt accumulation is unsustainable”. (Translation: I’m schizophrenic, but I hope you don’t notice)
To understand just how damaging this can turn out for America, simply look at Zimbabwe. Thats a clear example of what happens when debt is ignored and the country is managed by out of touch political “leaders,” accountable to no one. Therefore Thomas Jefferson was right after all.
This is why all of us need to get involved and fight like crazy to take back control of our country (in a peaceful way). Politicians need to be accountable, forced to follow the law of the land and to stop managing our great country in a “loosey-goosey” manner which has lead us to the brink of economic collapse - to the detriment of all (including both your people and my people).
Its Friday - have a great weekend.
Joined: November 18th, 2009
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If they lost their place and missed their “Window of time” they would have to wait for 6-9 months for their next available opportunity to see a dentist.
An NHS dentist. Dentistry isn’t even covered by Medicare any more so the US has no socialist dentistry so the wait time for an equivalent in the US is infinite.
The UK still has private dentistry for those willing to pay instead of wait and AFAICT medical services are so critical that I simply don’t trust the free market in providing them — providers have too much pricing power due to there guilding (limiting supply), asymmetrical information (they’re the experts), and inelastic demand that is usually not price sensitive (health is wealth).
Wait a minute, to make matters ever worse the Obama Administration is piling on unprecedented massive amounts of debt on the American people while at the very same time stating that “debt accumulation is unsustainable”.
Obama’s administration is responsible for two months of gov’t spending now since the fiscal year started last month.
Therefore Thomas Jefferson was right after all.
Jefferson was right about a lot of things, but it’s not longer the 18th century and his agrarian-centered outlook isn’t going to work now.
What the teabaggers ignore is that private corporations and concentrated wealth can be just as tyrannical as the worst collectivized hellhole.
stop managing our great country in a “loosey-goosey” manner which has lead us to the brink of economic collapse
I agree with this, however. As a left-libertarian I’d like to see DC focus on national issues and my state government focus on everything else, like it should be. The problem with this is that California is about the optimal size but most states are just a bit too small to be independent states in the full sense of the word.