CRA Not to Blame for Housing Debacle

[bigrebnc1775]

The following timeline of events is the TRUTH that caused the economic collapse.

1.Our Government passes the Community Reinvestment Act of 1977 in an effort to assist low-income individuals to buy homes.

2.The CRA of 1977 simply “encourages” banks to make a certain amount of loans to low-income individuals. No enforcement or penalty for not being “encouraged”…yet.

3.In the mid 1990′s the HUD department of the Government begins requiring banks to prove they are making the right number of low-income loans.

4.Banks not making the government imposed and now enforced “quota” are penalized.

5.The Clinton and Bush administrations with Barney Frank and Chris Dodd use the
Community Reinvestment Act of 1977 to force banks to make loans to unqualified people in the name of making homes affordable to everyone. This guarantees votes for the politicians. They ignore the likely economic outcome of giving loans to people who can’t pay them back.

6.If the banks don’t make the loans to unqualified borrowers, our Government prevents banks from opening new branches, new ATM’s or expanding. Every bank knows if they don’t accept the invite to the Government party and start giving out loans to people that can’t pay them back, SOME bank will….which will force other banks out of business as the bank willing to play this game gets to expand and take marketshare from the other banks, who are denied by our Government every application to expand.

7.Unqualified borrowers (low-income, bad credit, no down-payment) are suddenly made “qualified” by banks being blackmailed by our own government.

8.As these “unqualified” borrowers flood the market overnight buying houses, a rapid decrease in housing inventory begins inflating prices beyond normal ranges. Basic supply and demand principle.

9.Builders rush in and begin building homes but panic sets in as buyers continue to flood the market for fear of being “priced out forever.” The National Association of Realtors (NAR) perpetuates this fear in the media to make more money through Realtor sales commissions.........>>>>>>>>>

36.Government (and Barney Frank-the host of the Government Party) blames Wall Street and Banks for the whole thing.
37.Responsible taxpayer is handed the bill.


There's more in the link posted
What Caused Our Economic Collapse in a Nutshell Angrywoodchuck's Blog

if we hadn't won world war II, none of this would have happened.

i blame patton and that commie bastard, zhukov.

And it's asine to say the democrats and the CRA ia not at fault for the failure in the economt.

 

[del]

The following timeline of events is the TRUTH that caused the economic collapse.

1.Our Government passes the Community Reinvestment Act of 1977 in an effort to assist low-income individuals to buy homes.

2.The CRA of 1977 simply “encourages” banks to make a certain amount of loans to low-income individuals. No enforcement or penalty for not being “encouraged”…yet.

3.In the mid 1990′s the HUD department of the Government begins requiring banks to prove they are making the right number of low-income loans.

4.Banks not making the government imposed and now enforced “quota” are penalized.

5.The Clinton and Bush administrations with Barney Frank and Chris Dodd use the
Community Reinvestment Act of 1977 to force banks to make loans to unqualified people in the name of making homes affordable to everyone. This guarantees votes for the politicians. They ignore the likely economic outcome of giving loans to people who can’t pay them back.

6.If the banks don’t make the loans to unqualified borrowers, our Government prevents banks from opening new branches, new ATM’s or expanding. Every bank knows if they don’t accept the invite to the Government party and start giving out loans to people that can’t pay them back, SOME bank will….which will force other banks out of business as the bank willing to play this game gets to expand and take marketshare from the other banks, who are denied by our Government every application to expand.

7.Unqualified borrowers (low-income, bad credit, no down-payment) are suddenly made “qualified” by banks being blackmailed by our own government.

8.As these “unqualified” borrowers flood the market overnight buying houses, a rapid decrease in housing inventory begins inflating prices beyond normal ranges. Basic supply and demand principle.

9.Builders rush in and begin building homes but panic sets in as buyers continue to flood the market for fear of being “priced out forever.” The National Association of Realtors (NAR) perpetuates this fear in the media to make more money through Realtor sales commissions.........>>>>>>>>>

36.Government (and Barney Frank-the host of the Government Party) blames Wall Street and Banks for the whole thing.
37.Responsible taxpayer is handed the bill.


There's more in the link posted
What Caused Our Economic Collapse in a Nutshell Angrywoodchuck's Blog

if we hadn't won world war II, none of this would have happened.

i blame patton and that commie bastard, zhukov.

And it's asine to say the democrats and the CRA ia not at fault for the failure in the economt.

what's asinine is to devote more time to assigning blame than to fixing the problem.

money has no party affiliation. you may want to write that down.

 

[Toro]

The following timeline of events is the TRUTH that caused the economic collapse.

1.Our Government passes the Community Reinvestment Act of 1977 in an effort to assist low-income individuals to buy homes.

2.The CRA of 1977 simply “encourages” banks to make a certain amount of loans to low-income individuals. No enforcement or penalty for not being “encouraged”…yet.

3.In the mid 1990′s the HUD department of the Government begins requiring banks to prove they are making the right number of low-income loans.

4.Banks not making the government imposed and now enforced “quota” are penalized.

5.The Clinton and Bush administrations with Barney Frank and Chris Dodd use the
Community Reinvestment Act of 1977 to force banks to make loans to unqualified people in the name of making homes affordable to everyone. This guarantees votes for the politicians. They ignore the likely economic outcome of giving loans to people who can’t pay them back.

6.If the banks don’t make the loans to unqualified borrowers, our Government prevents banks from opening new branches, new ATM’s or expanding. Every bank knows if they don’t accept the invite to the Government party and start giving out loans to people that can’t pay them back, SOME bank will….which will force other banks out of business as the bank willing to play this game gets to expand and take marketshare from the other banks, who are denied by our Government every application to expand.

7.Unqualified borrowers (low-income, bad credit, no down-payment) are suddenly made “qualified” by banks being blackmailed by our own government.

8.As these “unqualified” borrowers flood the market overnight buying houses, a rapid decrease in housing inventory begins inflating prices beyond normal ranges. Basic supply and demand principle.

9.Builders rush in and begin building homes but panic sets in as buyers continue to flood the market for fear of being “priced out forever.” The National Association of Realtors (NAR) perpetuates this fear in the media to make more money through Realtor sales commissions.........>>>>>>>>>

36.Government (and Barney Frank-the host of the Government Party) blames Wall Street and Banks for the whole thing.
37.Responsible taxpayer is handed the bill.


There's more in the link posted
What Caused Our Economic Collapse in a Nutshell Angrywoodchuck's Blog

There is no "truth" because you have not demonstrated causality. All you've done is post a timeline, and not a very good one at that given that it doesn't mention a word about interest rates.

The right-wing narrative relies solely on timelines, at least from what I've seen, implying a causal relationship between the CRA and the Financial Crisis without actually offering up any empirical evidence to back up their claim. I would be more than happy to be shown such a relationship, but no one on the Right has yet done so, or at least I haven't seen it. In fact, the empirical evidence thus far refutes their argument.

 

[bigrebnc1775]

The following timeline of events is the TRUTH that caused the economic collapse.

1.Our Government passes the Community Reinvestment Act of 1977 in an effort to assist low-income individuals to buy homes.

2.The CRA of 1977 simply “encourages” banks to make a certain amount of loans to low-income individuals. No enforcement or penalty for not being “encouraged”…yet.

3.In the mid 1990′s the HUD department of the Government begins requiring banks to prove they are making the right number of low-income loans.

4.Banks not making the government imposed and now enforced “quota” are penalized.

5.The Clinton and Bush administrations with Barney Frank and Chris Dodd use the
Community Reinvestment Act of 1977 to force banks to make loans to unqualified people in the name of making homes affordable to everyone. This guarantees votes for the politicians. They ignore the likely economic outcome of giving loans to people who can’t pay them back.

6.If the banks don’t make the loans to unqualified borrowers, our Government prevents banks from opening new branches, new ATM’s or expanding. Every bank knows if they don’t accept the invite to the Government party and start giving out loans to people that can’t pay them back, SOME bank will….which will force other banks out of business as the bank willing to play this game gets to expand and take marketshare from the other banks, who are denied by our Government every application to expand.

7.Unqualified borrowers (low-income, bad credit, no down-payment) are suddenly made “qualified” by banks being blackmailed by our own government.

8.As these “unqualified” borrowers flood the market overnight buying houses, a rapid decrease in housing inventory begins inflating prices beyond normal ranges. Basic supply and demand principle.

9.Builders rush in and begin building homes but panic sets in as buyers continue to flood the market for fear of being “priced out forever.” The National Association of Realtors (NAR) perpetuates this fear in the media to make more money through Realtor sales commissions.........>>>>>>>>>

36.Government (and Barney Frank-the host of the Government Party) blames Wall Street and Banks for the whole thing.
37.Responsible taxpayer is handed the bill.


There's more in the link posted
What Caused Our Economic Collapse in a Nutshell Angrywoodchuck's Blog

There is no "truth" because you have not demonstrated causality. All you've done is post a timeline, and not a very good one at that given that it doesn't mention a word about interest rates.

The right-wing narrative relies solely on timelines, at least from what I've seen, implying a causal relationship between the CRA and the Financial Crisis without actually offering up any empirical evidence to back up their claim. I would be more than happy to be shown such a relationship, but no one on the Right has yet done so, or at least I haven't seen it. In fact, the empirical evidence thus far refutes their argument.

I just gave you the timeline which can be varified. so your opinion is moot.

 

[bigrebnc1775]

if we hadn't won world war II, none of this would have happened.

i blame patton and that commie bastard, zhukov.

And it's asine to say the democrats and the CRA ia not at fault for the failure in the economt.

what's asinine is to devote more time to assigning blame than to fixing the problem.

money has no party affiliation. you may want to write that down.

You must assign blame to prevent this from happening again. If you do not know where the problem started you will continue to make the same mistake time after time after time.

 

[Toro]

I just gave you the timeline which can be varified. so your opinion is moot.

But you cannot verify causality and you offered no empirical evidence. All you've done is post a timeline.

 

[Truthmatters]

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.

A pair of economists from the Federal Reserve Bank of San Francisco added another piece of evidence to the case that the 1977 Community Reinvestment Act wasn’t the cause, or even a major contributor, to the subprime mortgage debacle.

In a paper focused on California that was presented at a Fed conference on housing and mortgages in Washington, D.C., Elizabeth Laderman and Carolina Reid say the data “should help to quell if not fully lay to rest the arguments that the CRA caused the current subprime lending boom by requiring banks to lend irresponsibly in low and moderate-income lenders.” Fed governor Randall Kroszner made a similar case earlier this week.

Among the specific findings in “Lending in Low- and Moderate-Income Neighborhoods in California: The Performance of CRA Lending During the Subprime Meltdown”:
# Overall, lending to low and moderate income communities comprised only a small share of toal lending by CRA lenders, even during the height of the California subprime lending boom.
# Loans originated by lenders regulated under CRA in general were “significantly less likely to be in foreclosure” than those originated by independent mortgage companies that weren’t covered by CRA.
# Loans made by CRA lenders within their geographic assessment areas covered by the law were “half as likely to go into foreclosure” as those made by the independent mortgage companies.
# 28% of loans made by CRA lenders in low income areas within their geographic assessment areas were fixed-rate loans, compared with 18.2% of loans made by independent mortgage companies in low income areas.
# 12% of the loans made by CRA lenders in these areas were high-priced loans, a technical definition of subprime, compared with 29% of the loans made by those lenders outside their assessment areas and 52.4% of loans made by independent mortgage companies in low-income areas.

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

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

The “striking result,” Kroszner said: “Only 6% 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.” Banks can also meet CRA obligations by buying loans from mortgage brokers, he noted. But less than 2% of the higher-priced loans (those would help banks meet CRA requirements) sold by independent mortgage companies were purchased by CRA-covered institutions.

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

It seems that you consider this topic proprietary, but in my view, you neglect to give proper weight to the political climate and the pressure it put on the financial atmosphere, i.e. the Community Reinvestment Act. If you look at the Time article under Bill Clinton, there is further reference to the CRA.

Bill Clinton - 25 People to Blame for the Financial Crisis - TIME

George W. Bush - 25 People to Blame for the Financial Crisis - TIME

it mentions a few other people too, including Phil Gramm, Paulson and Bush.

 

[bigrebnc1775]

I just gave you the timeline which can be varified. so your opinion is moot.

But you cannot verify causality and you offered no empirical evidence. All you've done is post a timeline.

Without the CRA bad loans would have never been made. Without the threat of fines no bad loans would have been made, without the guarantee by Freddie and Fannie to cover any bad loans no bad loans would have been made.

 

[Truthmatters]

For some all they need is something to pin it on that fits their narrative.

To them the real causes dont matter

 

[bigrebnc1775]

For some all they need is something to pin it on that fits their narrative.

To them the real causes dont matter

So exactly what is the real cause?
only a fool will keep repeating the same thing over and over expecting the out come to somehow be differant.

 

[Toro]

I just gave you the timeline which can be varified. so your opinion is moot.

But you cannot verify causality and you offered no empirical evidence. All you've done is post a timeline.

Without the CRA bad loans would have never been made. Without the threat of fines no bad loans would have been made, without the guarantee by Freddie and Fannie to cover any bad loans no bad loans would have been made.

Again, if this were true, you should easily be able to find empirical evidence for your argument. But I haven't seen any. All that I've seen are timelines like the one you've posted which do not demonstrate any causal link.

If the CRA caused the financial crisis, then you would, at a minimum, expect CRA loans to have a greater rate of default, which did not happen. You would have also expected that home prices would have risen faster and collapsed harder in CRA areas. But again, that did not happen. 24 of the 25 largest subprime lenders were not covered by the CRA. 94% of all subprime loans were made outside of CRA areas. Yet we are supposed to believe that the CRA caused the financial crisis.

 

[bigrebnc1775]

But you cannot verify causality and you offered no empirical evidence. All you've done is post a timeline.

Without the CRA bad loans would have never been made. Without the threat of fines no bad loans would have been made, without the guarantee by Freddie and Fannie to cover any bad loans no bad loans would have been made.

Again, if this were true, you should easily be able to find empirical evidence for your argument. But I haven't seen any. All that I've seen are timelines like the one you've posted which do not demonstrate any causal link.

If the CRA caused the financial crisis, then you would, at a minimum, expect CRA loans to have a greater rate of default, which did not happen. You would have also expected that home prices would have risen faster and collapsed harder in CRA areas. But again, that did not happen. 24 of the 25 largest subprime lenders were not covered by the CRA. 94% of all subprime loans were made outside of CRA areas. Yet we are supposed to believe that the CRA caused the financial crisis.

Let's define empirical evidence
From the Miriam Webster online dictionary empirical means: 1 : originating in or based on observation or experience 2 : relying on experience or observation alone often without due regard for system and theory 3 : capable of being verified or disproved by observation or experiment



Read more: Answers.com - What is empirical evidence

The time line gave you your empirical evidence.

 

[bigrebnc1775]

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

It seems that you consider this topic proprietary, but in my view, you neglect to give proper weight to the political climate and the pressure it put on the financial atmosphere, i.e. the Community Reinvestment Act. If you look at the Time article under Bill Clinton, there is further reference to the CRA.

Bill Clinton - 25 People to Blame for the Financial Crisis - TIME

George W. Bush - 25 People to Blame for the Financial Crisis - TIME

it mentions a few other people too, including Phil Gramm, Paulson and Bush.

This has already been disproven.
ATTENTION Del people like truth matters is why we must show proof of blame people like truth matters wants to continue with the same old shit.

 

[Toro]

Without the CRA bad loans would have never been made. Without the threat of fines no bad loans would have been made, without the guarantee by Freddie and Fannie to cover any bad loans no bad loans would have been made.

Again, if this were true, you should easily be able to find empirical evidence for your argument. But I haven't seen any. All that I've seen are timelines like the one you've posted which do not demonstrate any causal link.

If the CRA caused the financial crisis, then you would, at a minimum, expect CRA loans to have a greater rate of default, which did not happen. You would have also expected that home prices would have risen faster and collapsed harder in CRA areas. But again, that did not happen. 24 of the 25 largest subprime lenders were not covered by the CRA. 94% of all subprime loans were made outside of CRA areas. Yet we are supposed to believe that the CRA caused the financial crisis.

Let's define empirical evidence
From the Miriam Webster online dictionary empirical means: 1 : originating in or based on observation or experience 2 : relying on experience or observation alone often without due regard for system and theory 3 : capable of being verified or disproved by observation or experiment



Read more: Answers.com - What is empirical evidence

The time line gave you your empirical evidence.

No it is not because you do not establish a causal relationship. Correlation does not imply causation. I can make a timeline on anything.

 

[editec]

How anyone everr bought that plate of shit in the first place was beyond me.

the CRA was a blip in the real story.

You know perfectly well that faith based anti-government believers will clutch at ANY STRAW to obfuscate the truth when the TRUTH is that the private sector screws up.

The truth is that no law of the land FORCED private banks and mortgage companies to lend money to people who couldn't afford to pay it back.

NO LAW made them do that. GREED made them do that, folks.

Fannie Mae and other banks that were bundling junk mortgages and selling them to unsuspecting investors? Now made it possible for the PRIVATE SECTOR banks NOT TO CARE if the people couldn't pay it back, of course.

 

[boedicca]

Nonsense. The CRA is not entirely to blame, but it did contribute to the problem by encouraging the overall loosening of lending standards for everyone.

 

[bigrebnc1775]

Again, if this were true, you should easily be able to find empirical evidence for your argument. But I haven't seen any. All that I've seen are timelines like the one you've posted which do not demonstrate any causal link.

If the CRA caused the financial crisis, then you would, at a minimum, expect CRA loans to have a greater rate of default, which did not happen. You would have also expected that home prices would have risen faster and collapsed harder in CRA areas. But again, that did not happen. 24 of the 25 largest subprime lenders were not covered by the CRA. 94% of all subprime loans were made outside of CRA areas. Yet we are supposed to believe that the CRA caused the financial crisis.

Let's define empirical evidence
From the Miriam Webster online dictionary empirical means: 1 : originating in or based on observation or experience 2 : relying on experience or observation alone often without due regard for system and theory 3 : capable of being verified or disproved by observation or experiment



Read more: Answers.com - What is empirical evidence

The time line gave you your empirical evidence.

No it is not because you do not establish a causal relationship. Correlation does not imply causation. I can make a timeline on anything.

Let's define causal relationship

Definitions of Causal relationship on the Web:

•Causality is the relationship between an event (the cause) and a second event (the effect), where the second event is a consequence of the first.

define:Causal relationship - Google Search
Back to the timeline or the drawing board for you.

 

[Toro]

Let's define empirical evidence
From the Miriam Webster online dictionary empirical means: 1 : originating in or based on observation or experience 2 : relying on experience or observation alone often without due regard for system and theory 3 : capable of being verified or disproved by observation or experiment



Read more: Answers.com - What is empirical evidence

The time line gave you your empirical evidence.

No it is not because you do not establish a causal relationship. Correlation does not imply causation. I can make a timeline on anything.

Let's define causal relationship

Definitions of Causal relationship on the Web:

•Causality is the relationship between an event (the cause) and a second event (the effect), where the second event is a consequence of the first.

define:Causal relationship - Google Search
Back to the timeline or the drawing board for you.

You haven't established a relationship between the events. You have to back it up with data. I could write a timeline of Reagan's election and the Housing Bubble and say that he caused it, but that doesn't make it true.

If your argument is true, there should be data out there substantiating it. But I haven't seen any. I know of no conservative who has made this argument and backed it up with any data to support it. I have seen plenty of data refuting it but none that supports it.

 

[bigrebnc1775]

No it is not because you do not establish a causal relationship. Correlation does not imply causation. I can make a timeline on anything.

Let's define causal relationship

Definitions of Causal relationship on the Web:

•Causality is the relationship between an event (the cause) and a second event (the effect), where the second event is a consequence of the first.

define:Causal relationship - Google Search
Back to the timeline or the drawing board for you.

You haven't established a relationship between the events. You have to back it up with data. I could write a timeline of Reagan's election and the Housing Bubble and say that he caused it, but that doesn't make it true.

If your argument is true, there should be data out there substantiating it. But I haven't seen any. I know of no conservative who has made this argument and backed it up with any data to support it. I have seen plenty of data refuting it but none that supports it.

Here's the relationship

"Without the CRA bad loans would have never been made. Without the threat of fines no bad loans would have been made, without the guarantee by Freddie and Fannie to cover any bad loans no bad loans would have been made."

 

[Toro]

Here's the relationship

"Without the CRA bad loans would have never been made. Without the threat of fines no bad loans would have been made, without the guarantee by Freddie and Fannie to cover any bad loans no bad loans would have been made."

But that's wrong.

- 94% of the subprime loans made were outside the CRA areas
- 24 of the 25 top subprime lenders did not have CRA mandates.
- the rate of default for CRA loans was no greater than other subprime mortgages
- the GSEs lost share to private lenders with no CRA mandate in subprime from 2002 through 2006, the duration of the bubble.

Therefore, you claim isn't true because most of the bad loans made had no relationship with the CRA.