A growing 'amnesia' of the Economic Crisis

[ShaklesOfBigGov]

hey dummy those TOO BIG TOO FAIL idiots were private industry allowed to get so BIG that their duplicity would kill the country when they got caught cheating.



jesus you will conflate anything

Some information regarding Fannie and Freddie, for the sake of discussion

The Federal National Mortgage Association, commonly known as Fannie Mae, was created at the request of President Franklin D. Roosevelt in 1938. At the time, the mortgage market was segmented and the availability of funds to borrowers was inconsistent. As a government agency, Fannie Mae was authorized to borrow funds to buy Federal Housing Administration (FHA) insured mortgages from the institution that originated them, thereby providing additional funds to the loan originators and creating a secondary market for mortgages. Fannie then held these mortgages in its portfolio, receiving income as borrowers repaid interest and principals.

In 1992, the Office of Federal Housing Enterprise Oversight (OFHEO) within HUD was created to regulate Fannie and Freddie. Among its responsibilities, OFHEO was authorized to place Freddie or Fannie into government conservatorship if it decided either agency was critically undercapitalized.

Prior to the government takeover, Fannie Mae and Freddie Mac were funded with private capital and their debt securities were not guaranteed by the federal government. They were stockholder-owned corporations listed on the New York Stock Exchange (NYSE). However, they were also government-sponsored enterprises (GSEs) owned by their shareholders, but regulated by government agencies.

Who are Fannie Mae and Freddie Mac? | Graziadio Business Review | Graziadio School of Business and Management | Pepperdine University

 

[Truthmatters]

Timing and Temporary Exemption
As adopted, Regulation R provides banks with a transitional exemption until the first day of their first fiscal year commencing after Sept. 30, 2008. This will give banks time to make any necessary changes in their systems and compliance programs and should ensure that banks have time to come into compliance with the Exchange Act provisions relating to the broker definition. This exemptive rule will become effective on the date that the Commission's current order expires, Sept. 28, 2007.

why did they hold back the broker rules on the banks that was WRITTEN into the laws of this country?

You're citing times when Congress, charged by the constitution with spending, was controlled by spendthrift and don't-read-just-pass Nancy Pelosi, DEMOCRAT!

Stop foisting your stale lies, TM.

explain to me what part of the SEC relase is a lie?

 

[Truthmatters]

SEC Votes for Final Rules Defining How Banks Can Be Securities Brokers
Eight Years After Passage of the Gramm-Leach-Bliley Act, Key Provisions Will Now Be Implemented
FOR IMMEDIATE RELEASE
2007-190
Washington, D.C., Sept. 19, 2007 - Ending eight years of stalled negotiations and impasse, the Commission today voted to adopt, jointly with the Board of Governors of the Federal Reserve System (Board), new rules that will finally implement the bank broker provisions of the Gramm-Leach-Bliley Act of 1999. The Board will consider these final rules at its Sept. 24, 2007 meeting. The Commission and the Board consulted with and sought the concurrence of the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and Office of Thrift Supervision.




where is the lie in this Bush SEC release?

 

[Darkwind]

More and more I'm finding the left rebutting the efforts of President Obama to stabilize the economy, by siting blame for this whole economic mess on President Bush and the Republicans. HOWEVER, the evidence I've seen shows an economic meltdown could have been avoided ... had the ideological views and self interests of certain members of Congress not gotten in the way. For those unfamiliar with what actually went on in Congress, I've included a "smaller" timeline of events as well and a source (to get an even MORE detailed view of what actually went on that led to this whole economic crisis).

Was President Bush solely to blame for the economic mess we are experiencing? I'm finding that there is a growing case of amnesia towards the events that led up to this crippling recession, perhaps it's just a lack of knowledge. This "blame Republicans" appears to be just rooted in opinions by those who share an overall hatred of the right, as they just happen to be the party that stands in the way of further government entitlement programs that the left loves so much.

September 1999

With pressure from the Clinton Administration, Fannie Mae eased credit requirements on loans it would purchase from lenders, making it easier for banks to lend to borrowers unqualified for conventional loans. Raines explained that "there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market," reported the New York Times.

With this action, Fannie Mae put itself at substantial risk in the event of an economic downturn. "From the perspective of many people, including me, this is another thrift industry growing up around us," warned Peter Wallison. "If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry." The danger was known.


March 2000

Rep. Richard Baker (R-Louisiana) proposed a bill to reform Fannie and Freddie's oversight in a House Subcommittee on Capital Markets.

Rep. Frank (D-Massachusetts) dismissed the idea, saying concerns about the two were "overblown" and that there was "no federal liability there whatsoever."


June 2000

Rep. Marge Roukema (R-New Jersey): "very few banks or S&Ls could, even in this day and age, even now, meet the stress-testing requirements which Fannie and Freddie are required to meet."

Rep. Carolyn Maloney (D-New York) regarding the Treasury Department line of credit: "It is really symbolic, it is obsolete, it has never been used." "Would you explain why it would be important to repeal something that seems to be of little use?"

Smith: "as long as the pipeline is there, it is like it is very expandable. . . . It is only $2 billion today. It could be $200 billion tomorrow."

Because of Democrat obfuscation, Smith's "tomorrow" arrived in 2008 when Treasury Secretary Henry Paulson put Fannie and Freddie into conservatorship.


February 2003

OFHEO reports that "although investors perceive an implicit Federal guarantee of [GSE] obligations . . . the government has provided no explicit legal backing for them," warning that unexpected problems at a GSE could immediately spread into financial sectors beyond the housing market, according to a White House release.


June 2003

Freddie Mac reported it had understated its profits by $6.9 billion. OFHEO director Armando Falcon Jr. requested that the White House audit Fannie Mae.


July 2003

Sens. Chuck Hagel (R-Nebraska), Elizabeth Dole (R-North Carolina) and John Sununu (R-New Hampshire) introduced legislation to address Regulation of Fannie Mae and Freddie Mac. The bill was blocked by Democrats.


September 2003

In an interview with Ron Insana for CNN Money, Rep. Baker warned, "I have concerns that if appropriate resources aren't allocated for internal risk management, the consequences will be far more severe than just a real estate slowdown. The losses would fall quickly through the capital these companies have and down to shareholders and taxpayers. These companies have some of the lowest capital margins of any financial institution in the nation, yet, at the same time, they are two of the largest. The concern is that if something doesn't work out the way they predict, the American taxpayer could be called on to pay off the debt in some sort of bailout."

Rep. Barney Frank (D-Massachusetts): "These two entities - Fannie Mae and Freddie Mac - are not facing any kind of financial crisis. . . . The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."


October 2003

Fannie Mae discloses $1.2 billion accounting error.


November 2003

Council of the Economic Advisers Chairman Greg Mankiw warned, "The enormous size of the mortgage-backed securities market means that any problems at the GSEs matter for the financial system as a whole. This risk is a systemic issue also because the debt obligations of the housing GSEs are widely held by other financial institutions. The importance of GSE debt in the portfolios of other financial entities means that even a small mistake in GSE risk management could have ripple effects throughout the financial system," from a White House release.


February 2004

Mankiw cautions Congress to "not take [the financial market's] strength for granted." Again, the call from the Administration was to reduce this risk by "ensuring that the housing GSEs are overseen by an effective regulator," says a White House release.

OFHEO reported that Fannie Mae and CEO Raines had manipulated its accounting to overstate its profits. Congress and the Bush administration sought strong new regulation and authority to put the GSEs under conservatorship if necessary. As the Washington Post reports, Fannie Mae and Freddie Mac responded by orchestrating a major campaign "by traditional allies including real estate agents, home builders and mortgage lenders. Fannie Mae ran radio and television ads ahead of a key Senate committee meeting, depicting a Latino couple who fretted that if the bill passed, mortgage rates would go up." Again, GSE pressure prevailed.


October 2004

In a subcommittee testimony, Democrats vehemently reject regulation of Fannie Mae in the face of dire warning of a Fannie Mae oversight report. A few of them, Black Caucus members in particular, are very angry at the OFHEO Director as they attempt to defend Fannie Mae and protect their CRA extortion racket.

Rep. Maxine Waters (D-California): "Through nearly a dozen hearings where, frankly, we were trying to fix something that wasn't broke."

Rep. Maxine Waters (D-California): "Mr. Chairman, we do not have a crisis at Freddie Mac, and particularly at Fannie Mae, under the outstanding leadership of Mr. Frank Raines."

Rep. Ed Royce (R-California): "In addition to our important oversight role in this committee, I hope that we will move swiftly to create a new regulatory structure for Fannie Mae, for Freddie Mac, and the federal home loan banks."

Rep. Lacy Clay (D-Missouri): "This hearing is about the political lynching of Franklin Raines."

Rep. Ed Royce (R-California): "There is a very simple solution. Congress must create a new regulator with powers at least equal to those of other financial regulators, such as the OCC or Federal Reserve."

Rep. Barney Frank (D-Massachusetts): "Uh, I, this, you, you, you seem to me saying, ‘Well, these are in areas which could raise safety and soundness problems.' I don't see anything in your report that raises safety and soundness problems."

Rep. Maxine Waters (D-California): "Under the outstanding leadership of Mr. Frank Raines, everything in the 1992 Act has worked just fine. In fact, the GSEs have exceeded their housing goals. What we need to do today is to focus on the regulator, and this must be done in a manner so as not to impede their affordable housing mission, a mission that has seen innovation flourish from desktop underwriting to 100% loans."

Rep. Don Manzullo (R-Illinois): "Mr. Raines, 1.1 million bonus and a $526,000 salary. Jamie Gorelick, $779,000 bonus on a salary of 567,000. This is, what you state on page eleven is nothing less than staggering."

Rep. Don Manzullo (R-Illinois): "The 1998 earnings per share number turned out to be $3.23 and 9 mills, a result that Fannie Mae met the EPS maximum payout goal right down to the penny."

Rep. Don Manzullo (R-Illinois): "Fannie Mae understood the rules and simply chose not to follow them that if Fannie Mae had followed the practices, there wouldn't have been a bonus that year."

"The bill prohibited the GSEs from holding portfolios, and gave their regulator prudential authority (such as setting capital requirements) roughly equivalent to a bank regulator. In light of the current financial crisis, this bill was probably the most important piece of financial regulation before Congress in 2005 and 2006," reports the Wall Street Journal.

Greenspan testified that the size of GSE portfolios "poses a risk to the global financial system. It would be difficult, if not impossible, to bail out the lenders [GSEs] . . . should one get into financial trouble." He added, "If we fail to strengthen GSE regulation, we increase the possibility of insolvency and crisis . . . We put at risk our ability to preserve safe and sound financial markets in the United States, a key ingredient of support for homeownership."

Greenspan warned that if the GSEs "continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road . . . We are placing the total financial system of the future at a substantial risk."

Bloomberg writes, "If that bill had become law, then the world today would be different. . . . But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter. That such a reckless political stand could have been taken by the Democrats was obscene even then."



April 2007

In "A Nightmare Grows Darker," the New York Times writes that the "democratization of credit" is "turning the American dream of homeownership into a nightmare for many borrowers." The "newfangled mortgage loans" called "affordability loans" "represent 60 percent of foreclosures."


2007-2008

The housing bubble began to burst, bad mortgages began to default, and finally the Fannie Mae and Freddie Mac portfolios were revealed to be what they were, in collapse. And the testimony is evident as to why. As Wallison noted, "Fannie and Freddie were, I would say, the poster children for corporate welfare."


Archived-Articles: Why the Mortgage Crisis Happened

It is not amnesia.

It is how history is rewritten.

 

[Sallow]

You know what shady? Saying the same thing over and over like you right wing whackos tend to do, does not change any facts.

Did Fannie and Freddie play a part. Absolutley. But the alt A program that they came out with was not the culprit. Their purchasing sub prime loans chasing big returns was a huge mistake.

Matter of fact, do you even know the difference between A paper, alt A paper and sub prime loans?
If you think you do, it might be funny to hear it.

Were politicians stupid about what was going on. Absolutley. Dems in particular. Rethugs were just devious and underhanded about what they were doing.

And do you know what CRA means. And how it mattered. And what it was intended to do?

And finally, what was the name of that legislation that Rethugs worked years to get overturned. And what was the purpose of that legislation and what happened after that legislation was repealed? You know, that legilation that Bill Clinton signed. Fool that he was for doing it.

If you can answer any of those questions accurately, maybe we should talk.

I wrote mortgage loans for 20 years. And what you want to believe happened and what really happened is not the same thing.

And Franklin Raines should have gone to jail. Along with a lot of other heads of banks, brokerages and hedge fund managers.

How come you aren't calling out the heads of the banks? Or Countrywide? Bear Sterns? Chase?
You probably think they did nothing wrong.

And did you know that there were a group of regional banks whose leadership didn't play the games that the big boys did. And you know what. They didn't lose a dime on their mortgage operations. They were true bankers and understood risk management. And they still sold loans to Fannie and Freddie. Loans that didn't default. How could that be?

Yes I spoke on the subject of the CRA, the Congressional testimony is only one piece of the puzzle. This was to nullify any attempt to say this economic problem is the result of simply the Republicans and President Bush, simply untrue and unfounded. The CRA included a set of regulations, passed under President Clinton, that forced banks to lend out to poor lower income families that would otherwise not be able to obtain a home. Issues like credit background checks, employment history (those areas banks would normally use as a standard for loan approval) was overlooked - as it was more important (for political reasons) that people obtain a home than could afford one. I could provide some links that support this new government regulation of "bank policy" if you like?

That's total and unmitigated bullshit.

What the CRA did was to end the practice of Redlining.

No banks were ever forced into loans they did not want to make.

 

[freedombecki]

Shakles of Big Govt, I'm not comfortable with this administration's failure to accept responsibility for its overspending, a press that paints good guys as bad guys, a public that sleeps through Congressional spending binges, and people believing silk-tongued lies pumped out by a President who thinks faking it will work, as in printing more money than we will ever have.

Overspending has run wild. Several of our conservatives who has good information on economic issues have pointed this out.

Overspending is not just a little pebble of error. It's the blatant use of big government to steal American people's assets for their agendas and nobody else's.

And they're prospering huge businesses rather than relying on many people to run decent businesses and spreading their wealth locally. With money concentrated in big population areas, the Congress has figured out a sure-fire way to enrich themselves personally with enough money to live abroad forever to the demise of the American public who will have to deal with the tsunami they leave behind when they retire, hoping to leave enough laws in place to get at age-wizened citizens who know what they did through withholding of health care services on account of their age.

Overspending on what?

Thanks for being a nice enough guy, Mr. Sallow to ask.

We have a Congress, led by Democrats, who passed a law to allegedly give Green companies an edge. If they had a chance, a few thousand dollars would have been enough to help them succeed.

Unfortunately, when Democrats in Congress viewed Green energy as a no-fail way to get green press approbation, Hollywood's love and money, and a public that snores its way through headlines since it's so busy trying to earn enough money to pay local and federal taxes--the Democrats passed a rule that the American public would back all of them to the penny for their "effort," and the public snowing was in full swing. This pleased those who were already on the horn to their bankruptcy lawyers, particularly those green businesses who sent lots of money to Democrats campaign re-elections. And Democrats, fat with votes with the carrot of a third Amnesty for another 9 million illegal aliens here for the welfare checks and voting freebies doled out to them in the form of no questions asked at the polls and plenty of Democrats around to help them with their "language" issues vote Democrat, which is quite against the law. That said, Democrats enjoy this double dip into the People's Treasury, because from this under-the-table quid pro quo-ing their constituents' money away, they get all that campaign cash or have the charitable US Democrat-controlled treasury to put them in the back of the line if they fail to come through, and to the front of the line for instant cash given their campaigns. How convenient, and who'd a thunk it from people they elected them to screw them for unseen treasury money extracted legally by shadow laws over and over and over.

Free billions for campaign thousands! That's the siren call of overspending.

That said, thanks again for asking, and here's a partial list of the grateful government Treasury bleeding partners:

.Solar Trust of America: Filed Bankruptcy in Oakland, CA, April 3, 2012 – On April 2, 2012

Bright Source: Bright Source warned Obama’s Energy Department officials in March 2011 that delays in approving a $1.6 billion U.S. loan guarantee would embarrass the White House and force the solar-energy company to close

Solyndra: Obama gave Solyndra $500,000,000 in taxpayer money and
LSP Energy:LSPEnergy LP filed bankruptcy protection and a sale of its assets in Feb 2012

Energy Conversion Devices: On February 14, 2012 Energy Conversion Devices, Inc. and its subsidiaries filed for bankruptcy

Abound Solar: Abound Solar received a $400 million loan guarantee from Barack Obama announced in June, 2012 that it would file for bankruptcy

SunPower: SunPower stopped producing solar cells last year at near bankruptcy restructured only with help of, get this, oil giant TOTAL who owns 60% stake. Irony! Still

Beacon Power: Beacon Power Corp filed for bankruptcy Oct 2011 just a year after Obama approved $43 million loan Government loan guarantee

Ecotality: - ECOtality, a San Francisco green-tech company that never earned any money on the verge of bankruptcy after receiving roughly $115 million in two loan guarantees from Obama

A123 Solar: -A123 received $279 million from taxpayers thanks to President Obama’sDepartment of Energy loan guarantees and after Solyndra bankruptcy is getting another $500M from Obama and it has lost $400M

UniSolar: - Uni-Solar filed for Ch 11 bankruptcy in June 20 this year laid off hundreds got more Obama money still failing but still in business

Azure Dynamics: - Azure Dynamics files for bankruptcy in June ter millions in Obama “Stimulus”

Evergreen Solar: - Evergreen Solar received $527 Million in Taxpayer money from Obama filed bankruptcy

Ener1: received more than $100 million in government funding from the Obama administration filed for bankruptcy January 2012
​

Filing bankruptcy papers in the economics community means a grudging never having to say you're sorry if you're friend to a Democrat maven like Nancy Pelosi, whose relatives were knee-deep in both Solyndra and the bankrupt SunPower, who were cheerfully represented by Harry Reid's son. Can you say nepotism is alive and well in American businesses?

Congress is so powerful now, and so is the presidency which has been abused by the White House calling the Treasury and demanding instant money for Solyndra to keep its business doors open for oh, say 18 months before greeting 1100 workers that sad Monday morning with lockdown of its facilities and no-notice firings. I feel sorry for the Fremont, CA community that lost 1100 jobs overnight due to a poor risk Democrats made to save Nancy Pelosi's relative from financial impairment in a bad investment, that they knew was a bad investment, and decided for their own enrichment to steal taxpayer money through hidden clauses in disgraceful white paper laws they pass to give themselves a kick upstairs at election time.

You can write them attaboys all day long, but at the end of the day, politicians all over are copying techniques and passing state and local laws to bilk taxpayers of more, more, and much more money. That leaves retired people who saved their money for a lifetime divvying up their low- to no-interest savings account up to be absorbed by city, county, state, national, and soon, international taxes. Nobody will be able to afford their overbearing property taxes who earned the American dream. Their children will get nothing because they had to parse out their property to real estate schemes to get the property for a small amount of ready cash before people die off in situations where the government can withhold their health care in the masquerade of "you're too old for this procedure" laws in ACA. The only thing the ACA affords is lots of free money to corrupt politicians who remind doctors and nurses of who's in charge.

Just sayin.

Edit: Oh, yes, here's the link to the failed Green businesses: http://www.sodahead.com/united-stat...st+of+failed+green+businesses+Congress+funded

A year ago, I saw a longer list yet at least 3 times as long, oh, well...

 

[g5000]

The GSEs were but one part of the global derviatives bubble.

Bear Stearns, Lehman Brothers, and Merrill Lynch were not GSEs. It is weird how those who obsess and talk about nothing but the GSEs act is if the collapse of Lehman Brothers never happened. And it was Lehman's collapse, not the GSEs, which caused the house of cards to come down.


Nor was it Congress which caused Wall Street to throw the underwriting laws of the Universe out the window. Wall Street did that all on its own in its pursuit of profits. Each of the major broker-dealers established their own supply chains to feed into their CDO manufacturing process.

This was all about servicing fees, kids.

Congress seriously relaxed the regulations over Wall Street with the Financial Services Modernization Act of 1999 (FSMA) and the Commodities Futures Modernization Act of 2000 (CFMA).

It should be noted the Congress which passed these Acts was a Republican one, not a Democratic one. And it was a Democratic President which signed them.

Bush furthered the cause by appointing a friend of Wall Street to head the SEC, Christopher Cox.

Furthermore, on Bush's watch the SEC commission unanimously approved a relaxation of the capital reserve requirements of the five biggest broker-dealers on Wall Street. Three of which ended up collapsing. Bear Stearns, followed by Lehman Brothers, followed by Merrill Lynch.


But that's not all!

This was a GLOBAL derivatives bubble. Something else those who obsess over the GSEs seem to be completely ignorant of. The entire banking industries of Iceland and Ireland collapsed. The Royal Bank of Scotland collapsed. Thousands of banks all around the globe collapsed.

And they are STILL collpasing. Greece, Cyprus, Italy, Spain. The show is far from over. This was not just mortgages. This was sovereign loans, car loans, any asset that could be securtized. Tens of trillions of dollars worth around the world.

Domestically, the GSEs were less than 50 percent of the secondary mortgage market by 2005. Another fact of which their detractors seem to be ignorant.

I will leave you with this final bit from Section 117 of the CFMA:

This Act shall supersede and preempt the application of any State or local law that prohibits or regulates gaming or the operation of bucket shops

Do you know what a bucket shop is?

A bucket shop is a ripoff joint that steals from stock market investors. It's like a horse race bookie who takes bets from suckers who don't know the races are fixed.

Notice, too, how the federal government usurped states rights with that section. A section written by a Republican. Not one states rights advocate shrieked over this Act or this Section.

Now ask yourself this question: Why the FUCK did BANKS need to be exempted from laws regulating CASINOS and BUCKET SHOPS!?!?!


Hmmmm...

Oh. One more question.

Why was the GOP trying to force Wall Street's competition (the GSEs) to be scaled back in their operations at the same time Wall Street was having its hands untied?

Hmmm...

 

[ShaklesOfBigGov]

Yes I spoke on the subject of the CRA, the Congressional testimony is only one piece of the puzzle. This was to nullify any attempt to say this economic problem is the result of simply the Republicans and President Bush, simply untrue and unfounded. The CRA included a set of regulations, passed under President Clinton, that forced banks to lend out to poor lower income families that would otherwise not be able to obtain a home. Issues like credit background checks, employment history (those areas banks would normally use as a standard for loan approval) was overlooked - as it was more important (for political reasons) that people obtain a home than could afford one. I could provide some links that support this new government regulation of "bank policy" if you like?

That's total and unmitigated bullshit.

What the CRA did was to end the practice of Redlining.

No banks were ever forced into loans they did not want to make.

Is it? Lets look into the Community Reinvestment Act [CRA] side of the discussion.

The Government Did It
Yaron Brook

The Community Reinvestment Act (CRA) forces banks to make loans in poor communities, loans that banks may otherwise reject as financially unsound. Under the CRA, banks must convince a set of bureaucracies that they are not engaging in discrimination, a charge that the act encourages any CRA-recognized community group to bring forward. Otherwise, any merger or expansion the banks attempt will likely be denied. But what counts as discrimination?

According to one enforcement agency, "discrimination exists when a lender's underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants." Note that these "arbitrary or outdated criteria" include most of the essentials of responsible lending: income level, income verification, credit history and savings history--the very factors lenders are now being criticized for ignoring.

The government has promoted bad loans not just through the stick of the CRA but through the carrot of Fannie Mae and Freddie Mac, which purchase, securitize and guarantee loans made by lenders and whose debt is itself implicitly guaranteed by the federal government.

The Government Did It - Forbes.com

The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities
Howard Husock

"Our job," says Marks, "is to push the envelope." Accordingly, he gladly lends to people with less than $3,000 in savings, or with checkered credit histories or significant debt. Many of his borrowers are single-parent heads of household. Such borrowers are, Marks believes, fundamentally oppressed and at permanent disadvantage, and therefore society must adjust its rules for them. Hence, NACA's most crucial policy decision: it requires no down payments whatsoever from its borrowers. A down-payment requirement, based on concern as to whether a borrower can make payments, is—when applied to low-income minority buyers—"patronizing and almost racist," Marks says.

. . . A no-down-payment policy reflects a belief that poor families should qualify for home ownership because they are poor, in contrast to the reality that some poor families are prepared to make the sacrifices necessary to own property, and some are not. Keeping their distance from those unable to save money is a crucial means by which upwardly mobile, self-sacrificing people establish and maintain the value of the homes they buy. If we empower those with bad habits, or those who have made bad decisions, to follow those with good habits to better neighborhoods—thanks to CRA's new emphasis on lending to low-income borrowers no matter where they buy their homes—those neighborhoods will not remain better for long.

The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities by Howard Husock, City Journal Winter 2000

Community Reinvestment Act prodded banks to take bad, costly risks in lending
COMMUNITY REINVESTMENT ACT December 28, 2012 By: Hans Bader


The Community Reinvestment Act was enacted in 1977, but it was not enforced stringently until regulations dramatically expanded its reach in the 1990s. It then became one of the factors that contributed to the financial crisis.

Banks and mortgage companies have long been under pressure from Congressmen and regulators to give loans to people with bad credit, in order to provide “affordable housing” and promote “diversity.” That played a key role in triggering the mortgage crisis, judging from a 2008 story in The New York Times. For example, “a high-ranking Democrat telephoned executives and screamed at them to purchase more loans from low-income borrowers.” The executives of government-backed mortgage giants Fannie Mae and Freddie Mac “eventually yielded to those pressures, effectively wagering that if things got too bad, the government would bail them out.” But they realized the risk: “In 2004, Freddie Mac warned regulators that affordable housing goals could force the company to buy riskier loans.” Ultimately, though, Freddie Mac’s CEO, Richard F. Syron, told colleagues that “we couldn’t afford to say no to anyone.”

Lenders also face the risk of being sued for discrimination if they fail to lend money to people with bad credit, which can have a racially-disparate impact. The Justice Department is now extorting multimillion dollar settlements from banks, by accusing them of racial discrimination because they use traditional, non-racist lending criteria that minority borrowers are, on average, less likely to satisfy, such as having a high credit score, or being able to afford a substantial downpayment. Its Civil Rights Division chief, Tom Perez, “has compared bankers to Klansmen.” The “only difference, he says, is bankers discriminate ‘with a smile’ and ‘fine print,’” calling their lending criteria “every bit as destructive as the cross burned in a neighborhood.” Investor’s Business Daily chronicles this attack on small banks in “DOJ Begins Bank Witch Hunt." (These lawsuits are brought under other laws regulating banks, not the CRA, which is but one of many tools the federal government used to promote risky lending).

Community Reinvestment Act prodded banks to take bad, costly risks in lending - Washington DC SCOTUS | Examiner.com

Here is the proof of the DOJ enforcing CRA through its lawsuits against banks, using the fear of racism, forcing banks to give in to lowering their home loan standards.

DOJ Begins Bank Witch Hunt
Investor's Business Daily – Fri, Jul 8, 2011 6:51 PM EDT


In what could be a repeat of the easy-lending cycle that led to the housing crisis, the Justice Department has asked several banks to relax their mortgage underwriting standards and approve loans for minorities with poor credit as part of a new crackdown on alleged discrimination, according to court documents reviewed by IBD.Prosecutions have already generated more than $20 million in loan set-asides and other subsidies from banks that have settled out of court rather than battle the federal government and risk being branded racist. An additional 60 banks are under investigation, a DOJ spokeswoman says.No Job, No ProblemSettlements include setting aside prime-rate mortgages for low-income blacks and Hispanics with blemished credit and even counting "public assistance" as valid income in mortgage applications.

DOJ Begins Bank Witch Hunt - Yahoo! Finance

 

[editec]

The Community Reinvestment Act (CRA, Pub.L. 95–128, title VIII of the Housing and Community Development Act of 1977, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.[1][2][3] Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining.[4][5]
The Act instructs the appropriate federal financial supervisory agencies to encourage regulated financial institutions to help meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation (Section 802.) To enforce the statute, federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions (Section 804.)[6]


2 History
2.1 Legislative revision history
2.2 Original act
2.3 Legislative changes 1989
2.4 Legislative changes 1991
2.5 Legislative changes 1992
2.6 Legislative changes 1994
2.7 Regulatory changes 1995
2.8 Legislative changes 1999
2.9 Regulatory changes 2005
2.10 Regulatory changes 2007
2.11 Legislative changes 2008
2.12 CRA reform proposals

Community Reinvestment Act - Wikipedia, the free encyclopedia

 

[Erand7899]

hey dummy those TOO BIG TOO FAIL idiots were private industry allowed to get so BIG that their duplicity would kill the country when they got caught cheating.



jesus you will conflate anything

Five years down the road, and how many of those "too big to fail" banks have been reduced to not to big to fail?

Is the Obama administration in on this duplicity, or are they just too damn dumb to deal with it?

 

[Truthmatters]

and how do you feel about all the prosicutions of the banks for selling sub prime in the triple AAA securities?


Now tell me how Obama could just do this all on his own?

are you suggesting an executive order to cut up the banks?

 

[g5000]

Anyone who blames the global derivatives crash on the CRA is a first class moron. Plain and simple.

Yeah. The Negroes of Iceland, right? The negroes of Ireland. The negroes of Scotland, Greece, Spain, and Italy.

The CRA sure had some reach!

 

[Soggy in NOLA]

and how do you feel about all the prosicutions of the banks for selling sub prime in the triple AAA securities?


Now tell me how Obama could just do this all on his own?

are you suggesting an executive order to cut up the banks?

You'll first have to tell us what the hell a prosicution is.

 

[g5000]

On one side of the table you had $70 trillion looking for somewhere to invest. That is not an exaggeration. $70 trillion.

That's 401k money, Saudi prince money, college endowment money, insurance money, city and state treasury money, public employee pension money, every loose dollar on the planet that wants to grow.


On the other side of the table, you had borrowers. A sprinklin of AAA borrowers, and a planet full of less than prime borrowers.


In the middle, you have the guy who brought the two sides to the table. He gets a fee every time he gets two of them together.





There was way more money than all the AAA borrowers combined can borrow. Much, much, much more. Tens and tens of trillions of dollars more. And, folks, that right there is the whole crux of the crash.






When the middle man ran out of AAA borrowers, he started bringing less than prime borrowers to the table. Because he wanted his fees to keep rolling in.

And the middle man invented all kinds of derivatives to deceive the people with the money. The middle man lied his ass off on the safety of loaning to this neverending stream of borrowers. Because he wanted to keep his fees rolling in.

Somewhere around 2005, 2006, the middle man began believing his own bullshit. He believed in his own instruments.

Well, most of the middle men did. But there were a few who knew exactly what they were doing and they were deliberately defrauding everyone in sight. Your 401k manager, your city treasurer, your public employee pension fund manager, your insurance company investment manager, your college endowment fund manager. They defrauded them all. Bought them all the hookers and blow they could handle, stroked their egos and complimented them on their financial acumen. And ripped every one of us off.

Bush took the cops off the beat. Clinton, the GOP Congress, and Bush untied the hands of the middle men. Christopher Cox openly fellated the middle men. And then when everything went to shit, he provided the thieves with police protection while they slaughtered sacrifical lambs in broad daylight. Washington Mutual, among others.

The ratings agencies took the models built for them by Wall Street, and then rated Wall Street's products based on what Wall Street's models told them to say! These assholes totally rolled over on every investor on the planet.

Congress and the White House couldn't wait to jump in front of cameras and take credit for all the people getting into houses. They bragged and bragged and bragged. Then when it all went to shit, they started pointing fingers at everyone else.

Then some dumb shit who did not know the first thing about how the mortgage market works, or how the underwriting laws of the universe were deliberately and willfully thrown out the window, or how derivatives work, decided the poor banks were FORCED to do all this. By the motherfuckin' CRA.

Jesus, it is one big circus of retards.

And the band plays on while the retards continue to fail to get a clue.

As if all those houses in all those white towns were experiencing housing booms from negroes getting loans. Gee, I had no idea Biff and his family were negroes! Oh, look, Fred's got himself a HELOC and used it to buy an SUV, and a boat, and a Disney vacation. That can't possibly have anything to do with the crash!

Thousands of banks around the world imploded. And somehow that is the CRA's fault? Seriously? How many pounds of brain damage does it take to be so retarded as to believe that shit?

Lehman was not subject to the CRA. Neither was Bear Stearns. Nor was Merrill Lynch. Nor was Goldman Sachs. Nor was JP Morgan. Nor was Morgan Stanely. Nor was the Royal Bank of Scotland. Nor were the banks of England, Ireland, Iceland, Germany Spain, Italy, or Greece.

Wake the fuck up.

There's no amnesia of the crisis. You have to have knowledge to begin with before you can forget it. And the retards have virtually no knowledge or understanding of the global derivatives bubble. Christ, they are so stupid they think it ended when the subprime mortgage bubble collapsed! As if that is all that was behind this mess.

 

[ShaklesOfBigGov]

Anyone who blames the global derivatives crash on the CRA is a first class moron. Plain and simple.

Yeah. The Negroes of Iceland, right? The negroes of Ireland. The negroes of Scotland, Greece, Spain, and Italy.

The CRA sure had some reach!

The problems we are seeing in some of these countries on a global scale can be broken down into one common denominator - "entitlements". Greece is the biggest example. The government is spending a lot more than it's taking in, while the citizens look to "government" to supply their needs, sounds familiar? Greece, Ireland, and Portugal have each sought bailouts for their insatiable spending appetites.

government spending among euro nations now consumes a staggering 49 percent of economic output

U.S. Should Learn from Europe's Welfare State Mistakes | Debate Club | US News Opinion

Great Britain's nationalized health care system is also overloaded in debt while it looks to find ways to save on costs, to the detriment of patients. This is another example of how this need for nationwide "entitlements" has become an, all too common, topheavy government burden of debt.

Sunday 17 April 2011

Growing numbers of patients are being wrongly denied a new hip, a weight loss operation or even cancer treatment because of NHS cost-cutting, the leaders of Britain's surgeons have warned.

Increasing rationing of operations is forcing patients to endure pain, injury or disability because NHS primary care trusts (PCTs) are ignoring evidence about the effectiveness of certain treatments simply to balance their books.

The unprecedented statement goes on: "For example, the lists include types of hip, spinal, ENT [ear, nose and throat], dental, bariatric [obesity] and cancer surgery for which there is overwhelming evidence of benefit. The only justification for these lists can be that they are a means of reducing expenditure at a time when the NHS faces a financial crisis."

Patients denied key treatments due to NHS cost-cutting, surgeons warn | Society | The Guardian

The United States is on a similar path of increasing government debt built on the need for more government entitlement "promises". The Community Reinvestment Act, is just one example of the effects government has in providing promises that it simply can't afford. CRA regulations which view "responsible" lending practices (such as : income level, income verification, credit history and savings history) as merely "discriminatory" practices. This belief stems from this growing perception with regard to home ownership:

"Our job," says Marks, "is to push the envelope." Accordingly, he gladly lends to people with less than $3,000 in savings, or with checkered credit histories or significant debt. Many of his borrowers are single-parent heads of household. Such borrowers are, Marks believes, fundamentally oppressed and at permanent disadvantage, and therefore society must adjust its rules for them.

An individuals who can't afford the payments of a new home as a result of their circumstances are now viewed as being "Fundamentally oppressed and at a permanent disadvantage, and therefore society must adjust its "RULES" for them? These same rules the banks use to determine who qualifies for mortgage loans in the first place - savings accounts, earned income level, etc. Now let's look at what all this means with respect to the involvement of government regulations.

During the Clinton administration Fannie Mae, under the leadership of Franklin Raines, set out to discourage banks from redlining. This term referred to the practice of banks refusing mortgages that they themselves viewed to be of "high risk", for fear of the mortgage going into default or foreclosure and the bank being stuck as property owner in a risky neighborhood. The regulations under CRA now meant that banks needed to fill a "quota" of leading to minorities, which led to the above paragraph of banks needing to REDUCE its lending standards for fear of being were to be deemed "discriminatory or racist". This then became the effort to get lower income families into homes the banks knew the borrower just could not afford, but were in fear of being deemed "discriminatory" to minorities and prosecuted ('DOJ Begins Bank Witch Hunt' article previously posted). In short, the need to allow lower income families to obtain housing was of a greater importance than "qualifications" and "ability" to pay BACK that loan (due to government regulations in place under CRA, AS WELL AS the encouraging "security" of receiving subprime mortgages that were below standards through Fannie Mae). Corporations like Lehman Brothers, became entangled in this same web of subprime mortgage lending practices. Practices that led to its downfall in 2008. A set of acceptable and tolerated practices, to the knowledge of those politicians in Congress, that led to this domino effect of collapses that started rolling the United States into an economic downward spiral.

You only have to have the ability to connect the dots, to see the effects of growing government entitlements brings to these countries, including the United States.


RESOURCES:
History of Lehman Brothers - Lehman Brothers Collection – Baker Library | Bloomberg Center, Historical Collections
The Nature and the Origin of the Subprime Mortgage Crisis

 

[velvtacheeze]

The GOP lost two elections in a row trying to blame others for the GOP mistakes. And they're still trying to foist blame onto others. The Bush Admin was among the worst Presidencies in American history, and the Right needs to learn from the mistakes and gaffes of it, instead of writing these eye-rollingly awful revisions of history.

Most important lesson: No Iraq War, No President Obama.

 

[editec]

The subprime mortgage crises mostly happened to PRIVATE BANKS.

Best and the Brightest my ass!

There ought to be hundreds of BANSTERS in prison, right now.

The fact that neither BUSH II nor Obama did that tells me all I need to know about BOTH PARTIES.

 

[zeke]

Anyone who blames the global derivatives crash on the CRA is a first class moron. Plain and simple.

Yeah. The Negroes of Iceland, right? The negroes of Ireland. The negroes of Scotland, Greece, Spain, and Italy.

The CRA sure had some reach!

The problems we are seeing in some of these countries on a global scale can be broken down into one common denominator - "entitlements". Greece is the biggest example. The government is spending a lot more than it's taking in, while the citizens look to "government" to supply their needs, sounds familiar? Greece, Ireland, and Portugal have each sought bailouts for their insatiable spending appetites.

government spending among euro nations now consumes a staggering 49 percent of economic output

U.S. Should Learn from Europe's Welfare State Mistakes | Debate Club | US News Opinion

Great Britain's nationalized health care system is also overloaded in debt while it looks to find ways to save on costs, to the detriment of patients. This is another example of how this need for nationwide "entitlements" has become an, all too common, topheavy government burden of debt.

Sunday 17 April 2011

Growing numbers of patients are being wrongly denied a new hip, a weight loss operation or even cancer treatment because of NHS cost-cutting, the leaders of Britain's surgeons have warned.

Increasing rationing of operations is forcing patients to endure pain, injury or disability because NHS primary care trusts (PCTs) are ignoring evidence about the effectiveness of certain treatments simply to balance their books.

The unprecedented statement goes on: "For example, the lists include types of hip, spinal, ENT [ear, nose and throat], dental, bariatric [obesity] and cancer surgery for which there is overwhelming evidence of benefit. The only justification for these lists can be that they are a means of reducing expenditure at a time when the NHS faces a financial crisis."

Patients denied key treatments due to NHS cost-cutting, surgeons warn | Society | The Guardian

The United States is on a similar path of increasing government debt built on the need for more government entitlement "promises". The Community Reinvestment Act, is just one example of the effects government has in providing promises that it simply can't afford. CRA regulations which view "responsible" lending practices (such as : income level, income verification, credit history and savings history) as merely "discriminatory" practices. This belief stems from this growing perception with regard to home ownership:

"Our job," says Marks, "is to push the envelope." Accordingly, he gladly lends to people with less than $3,000 in savings, or with checkered credit histories or significant debt. Many of his borrowers are single-parent heads of household. Such borrowers are, Marks believes, fundamentally oppressed and at permanent disadvantage, and therefore society must adjust its rules for them.

An individuals who can't afford the payments of a new home as a result of their circumstances are now viewed as being "Fundamentally oppressed and at a permanent disadvantage, and therefore society must adjust its "RULES" for them? These same rules the banks use to determine who qualifies for mortgage loans in the first place - savings accounts, earned income level, etc. Now let's look at what all this means with respect to the involvement of government regulations.

During the Clinton administration Fannie Mae, under the leadership of Franklin Raines, set out to discourage banks from redlining. This term referred to the practice of banks refusing mortgages that they themselves viewed to be of "high risk", for fear of the mortgage going into default or foreclosure and the bank being stuck as property owner in a risky neighborhood. The regulations under CRA now meant that banks needed to fill a "quota" of leading to minorities, which led to the above paragraph of banks needing to REDUCE its lending standards for fear of being were to be deemed "discriminatory or racist". This then became the effort to get lower income families into homes the banks knew the borrower just could not afford, but were in fear of being deemed "discriminatory" to minorities and prosecuted ('DOJ Begins Bank Witch Hunt' article previously posted). In short, the need to allow lower income families to obtain housing was of a greater importance than "qualifications" and "ability" to pay BACK that loan (due to government regulations in place under CRA, AS WELL AS the encouraging "security" of receiving subprime mortgages that were below standards through Fannie Mae). Corporations like Lehman Brothers, became entangled in this same web of subprime mortgage lending practices. Practices that led to its downfall in 2008. A set of acceptable and tolerated practices, to the knowledge of those politicians in Congress, that led to this domino effect of collapses that started rolling the United States into an economic downward spiral.

You only have to have the ability to connect the dots, to see the effects of growing government entitlements brings to these countries, including the United States.


RESOURCES:
History of Lehman Brothers - Lehman Brothers Collection – Baker Library | Bloomberg Center, Historical Collections
The Nature and the Origin of the Subprime Mortgage Crisis

So now you have gone from the CRA being the culprit to it's the "growing governmnet entitlements" as the culprit.

Sure am glad some of the contributors on here understand what the CRA was intended to accomplish and that the CRA was not really a contributor to the collapse.

And am glad that you have demonstrated enough intelligence to know when your ass has been beat on a particular topic.

Trying to blame the CRA for the housing collapse was a no win battle for you. As it wasn't the CRA'a fault.

 

[ShaklesOfBigGov]

Anyone who blames the global derivatives crash on the CRA is a first class moron. Plain and simple.

Yeah. The Negroes of Iceland, right? The negroes of Ireland. The negroes of Scotland, Greece, Spain, and Italy.

The CRA sure had some reach!

The problems we are seeing in some of these countries on a global scale can be broken down into one common denominator - "entitlements". Greece is the biggest example. The government is spending a lot more than it's taking in, while the citizens look to "government" to supply their needs, sounds familiar? Greece, Ireland, and Portugal have each sought bailouts for their insatiable spending appetites.



Great Britain's nationalized health care system is also overloaded in debt while it looks to find ways to save on costs, to the detriment of patients. This is another example of how this need for nationwide "entitlements" has become an, all too common, topheavy government burden of debt.



The United States is on a similar path of increasing government debt built on the need for more government entitlement "promises". The Community Reinvestment Act, is just one example of the effects government has in providing promises that it simply can't afford. CRA regulations which view "responsible" lending practices (such as : income level, income verification, credit history and savings history) as merely "discriminatory" practices. This belief stems from this growing perception with regard to home ownership:

"Our job," says Marks, "is to push the envelope." Accordingly, he gladly lends to people with less than $3,000 in savings, or with checkered credit histories or significant debt. Many of his borrowers are single-parent heads of household. Such borrowers are, Marks believes, fundamentally oppressed and at permanent disadvantage, and therefore society must adjust its rules for them.

An individuals who can't afford the payments of a new home as a result of their circumstances are now viewed as being "Fundamentally oppressed and at a permanent disadvantage, and therefore society must adjust its "RULES" for them? These same rules the banks use to determine who qualifies for mortgage loans in the first place - savings accounts, earned income level, etc. Now let's look at what all this means with respect to the involvement of government regulations.

During the Clinton administration Fannie Mae, under the leadership of Franklin Raines, set out to discourage banks from redlining. This term referred to the practice of banks refusing mortgages that they themselves viewed to be of "high risk", for fear of the mortgage going into default or foreclosure and the bank being stuck as property owner in a risky neighborhood. The regulations under CRA now meant that banks needed to fill a "quota" of leading to minorities, which led to the above paragraph of banks needing to REDUCE its lending standards for fear of being were to be deemed "discriminatory or racist". This then became the effort to get lower income families into homes the banks knew the borrower just could not afford, but were in fear of being deemed "discriminatory" to minorities and prosecuted ('DOJ Begins Bank Witch Hunt' article previously posted). In short, the need to allow lower income families to obtain housing was of a greater importance than "qualifications" and "ability" to pay BACK that loan (due to government regulations in place under CRA, AS WELL AS the encouraging "security" of receiving subprime mortgages that were below standards through Fannie Mae). Corporations like Lehman Brothers, became entangled in this same web of subprime mortgage lending practices. Practices that led to its downfall in 2008. A set of acceptable and tolerated practices, to the knowledge of those politicians in Congress, that led to this domino effect of collapses that started rolling the United States into an economic downward spiral.

You only have to have the ability to connect the dots, to see the effects of growing government entitlements brings to these countries, including the United States.


RESOURCES:
History of Lehman Brothers - Lehman Brothers Collection – Baker Library | Bloomberg Center, Historical Collections
The Nature and the Origin of the Subprime Mortgage Crisis

So now you have gone from the CRA being the culprit to it's the "growing governmnet entitlements" as the culprit.

Sure am glad some of the contributors on here understand what the CRA was intended to accomplish and that the CRA was not really a contributor to the collapse.

And am glad that you have demonstrated enough intelligence to know when your ass has been beat on a particular topic.

Trying to blame the CRA for the housing collapse was a no win battle for you. As it wasn't the CRA'a fault.

The CRA was one of the BIG factors that led to the economic collapse in the United States, surrounding the belief that lower income families should share the same benefit of owning a home. That's part of this government problem in "entitlement" perception. I have explained that in great lengthy detail already, citing the views of several Congressional politicians as to where they stood prior to finding a means to prevent this crisis, discussed in detail the CRA regulation and its impact on banking policies, explained the reason for the Lehman Brothers collapse, and cited several resources that back my findings. Simply stating the CRA played no part in the housing debacle shows a real lack of understanding of the purpose behind such regulation, and what effect it played on banks and the housing market. I'm still waiting on these facts and resources that shows your side of the discussion, on why you think government regulations had no hand in this economic mess. Perhaps you can show some detail resources that back your "claim" "opinion" that government regulation CRA played absolutely no role in this. Your resources seems to be rather thin in explaining that.

 

[zeke]

CRA = Community Reinvestment Act.

Do you know what "redlining" was.

All the act was designed to do was make bank loan products available to areas where they were soliciting bank deposits.

In other words, it was designed to keep a BANK from operating in an area where they received deposits from the area residents and offered little to no bank loans.

However, any bank loan that was offered was underwritten to the same credit and collateral standards that applied to any other area.

You probably don't know (but you should) that the mortgage loan brokerages that really got the housing mess started DID NOT HAVE TO OPERATE UNDER CRA GUIDELINES. You want to know why? Because they didn't have branch banking operations soliciting deposits.

You never did say whether you understand the difference between A paper loans, alt A and sub prime loans.

I don't think you know the difference and that is a problem when you are trying to come off as someone who understands the housing collapse.

I was there, I watched it happen. Your version is bull shit.