Community Reinvestment Act

you're missing it, completely....goes deeper...

It's Still Not CRA | New America Blogs

the lenders NOT COVERED by CRA made 75% of the subprime, risky loans, then sliced and diced them, and sold them off, masked in different forms, like MBS's....mortgage backed securities....while the regulatory and rating agencies turn a blind eye...and rating agencies were rating these MBS's as top of the line investments, which they were not....


Great article Care
 
Isn't it common sense???? If you have no risk you will be tempted not to follow good business practices. Loaning to people who are not qualified is obviously a poor choice. If the business was going to held accountable they would not have done this.

how did the banks know there would be no risk? was there a behind-the-scenes deal with politicians? it just seems like a big risk for banks to take without knowing for sure they would be protected. but how did they know?
 
This may not be the whole problem but you deny this is part of it.
 
how did the banks know there would be no risk? was there a behind-the-scenes deal with politicians? it just seems like a big risk for banks to take without knowing for sure they would be protected. but how did they know?
They knew there would be no risk because in 1999 banking regulations were relaxed to allow the bundling of mortgages into "mortgage backed securities" and allowed them to be sold immediately. The risk to the lender was small because the lender passed on the risk to someone else immediately.
 
This may not be the whole problem but you deny this is part of it.

kman-I honestly believe the CRA has done much more good than bad, since it's creation in the 70's....

It is a GOOD THING for more and more people to own a home...property ownership is good for all of society....and every community.

This mess hardly involves CRA at all, other than people NOW USING CRA as an EXCUSE to their own bad business decisions the past decade in creating these very very very high risk loans.....and selling them off faster than a hot potatoe passing hands....

kman-the bankers are trying to use it as an excuse, to make themselves free and clear of their own stupid, greedy and irresponsible business decisions for their immediate dollar in hand...and yes...some of fm/fm were part of this too....

care
 
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Austrian economist Thomas DiLorenzo counters Gordon's statistic by arguing that even if half of the subprime loans were made by non-CRA companies, the CRA had still caused tens of billions in defaults on mortgages by unqualified borrowers. He further states that Gordon's statistic ignores that independent mortgage companies are middlemen who sell subprime loans to banks that are in turn regulated by the CRA.[21]

And there you have it.
 
And that is where the Bush Undersight and the GLB act of 1999 come into play may friend.
 
care4all says that 75% of the loans defaulted on in the last 5 years were not CRA loans. That conversation hasn't concluded yet so, we'll see how it develops but in the meantime I'll accept the statement at face value.

OK, but then we must ask: how much does CRA account for the writing of mortages.

If, for example, they only comprise 5% of mortgages but account for 25% of the defaults that means a CRA is 5 times more likely to default. Again, my 5% figure is just a hypothetical.

But if CRA loans are above average defaulters it is not racist to say CRA laons are a bad idea if the lion's share of CRA loans are written to minorities. Facts are race neutral and wishing the GOP were racists does nothing but reinforce the petty bigotry in your mind that you're projecting onto the GOP.


Your missing the point though, its not the miniority part that causes problems, its the lack of funds problem. It wouldn't matter if the government forced banks to take on loans to low income whites uncapable of repaying, the result would be the same.
 
no hole, i said 75% of the subprime mortgages made to borrowers the past 5 years, were made by lenders that were not covered by CRA legislation...they were UNREGULATED....and not required to accomodate the lower income borrowers or small business owners or women which the CRA covers.
note!
75% of the loans made the past 5 years....

some are using a figure of 50%, but that is a figure from statistics up to 2004, i believe, and does not include the push these institutions not covered by CRA have had the past few years....

Care, does it matter when in the process these people defaulted. I mean most home loans are for 30 years afterall....

I don't know the percentage of home loans that defaulted were CRA loans, but it would be interesting to know.
 

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