CRA Not to Blame for Housing Debacle

Discussion in 'Economy' started by Toro, Feb 20, 2009.

  1. Toro
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    Toro Diamond Member

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    The idea that the CRA was a big contributor to the housing debacle keeps popping up. Thus, I'm creating a new thread to refute this assertion.

    The San Francisco Fed says that the CRA was not a primary contributor to the housing bubble.

    Real Time Economics : Don't Blame CRA (The Sequel)

    Federal Reserve governor, Randall Kroszner, says the CRA had little effect on home prices.

    Real Time Economics : Fed's Kroszner: Don't Blame CRA

    FDIC Chairwoman, Sheila Bair, and Comptroller of the Currency John Dugan say that the CRA was not a significant factor.

    FDIC’s Bair Sets to Shatter CRA “Myth” : HousingWire || financial news for the mortgage market
     
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  2. Toro
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    Toro Diamond Member

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    Another good post

    The Big Picture | Misunderstanding Credit and Housing Crises: Blaming the CRA, GSEs
     
  3. Toro
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    Toro Diamond Member

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    More on the genesis of the CRA

    More CRA Idiocy | The Big Picture
     
  4. Zoomie1980
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    Zoomie1980 Senior Member

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    This was caused by house flippers using jumbo mortgages....
     
  5. manu1959
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    manu1959 Left Coast Isolationist

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    lets see those passing out the loans did a study and found they and the policy they exploited was not at fault.......shocking i tell you ...shocking....
     
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    Last edited: Feb 20, 2009
  6. xsited1
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    xsited1 Agent P

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    :lol:
     
  7. Ravi
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    Ravi Diamond Member

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    Good thread, Toro, though since you aren't Glenn Beck or Rush Limbaugh you have no credibility with people that are bound and determined to scapegoat low income blacks.

    It's basic common sense to realize that the sum total of property mortgages owned by lower-income people is no where valuable enough to have more than the tiniest blip on the overall economy.
     
  8. Ravi
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    Ravi Diamond Member

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    Can any of you boneheads post the verbiage of a law that required banks to lend money to people that couldn't pay it back?

    I'll wait patiently for a response.
     
  9. editec
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    editec Mr. Forgot-it-All

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    The people in charge WERE responisble for this mess but the CRA wasn't why or how this mess happened.

    The fact that Fannie and Freddie would accept NINA loans is the root cause of the mortgage meltdown.

    The CRA existed for decades without causing a meltdown.

    But once Fannie said it was OKAY to sell a mortgage to people who had no income and no assets, AND THE BANKS WENT ALONG WITH THAT TO MAKE A LOT OF SALES, then this crises took root in our fiancial system.

    I do not understand why some of you have problems understanding this.

    It's fairly easy to understand.

    If the CRA was the problem then all the bad mortgages would be found in the GHETTOS of America.

    Are they?

    Now, actually very few of them are in those bad neighborhoods.

    Most of them are in CALIFORNIA and FLORDIA AND NEVADA's supposedly middle class neighborhoods.

    The CRA had nothing whatever to do with those houses being built or sold to people with NINA loans.
     
    Last edited: Feb 21, 2009
  10. jillian
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    jillian Princess Supporting Member

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    There wasn't any such requirement. The requirement was that minority communities not be red-lined and that qualified borrowers in minority communities be given appropriate consideration.

    The banks tossed away their OWN risk assessment requirements because property values kept going up and up and up and they made money on every re-fi. Then when housing values started to drop, the people who borrowed ended up owing more than the current value of their house, so weren't eligible any longer. They ended up with ARM's (which their mortgage peoplse swore to them they wouldn't be subject to b/c they would re-fi) which they couldn't afford.

    The simultaneous change in the bankruptcy law which prohibited most people from getting rid of their commercial debt and protecting their secured debt (their home) also helped to contribute to the current crisis.

    If the banks re-negotiated the loan amounts to their intitial values, most people would be able to make their payments, anyway. Hence the talk about courts re-structuring the debt (same as they do in bankruptcy).
     

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