Fact vs. Myth: Real Unemployment Rate (U-6) -- Obama vs. Bush

[mikegriffith1]

The real unemployment rate, the one that most media talking heads rarely mention, is called the U-6, and according to the Department of Labor, the U-6 rate is now 11.3%. Under Obama the U-6 has been as high as 17%. See:

Chart What s the real unemployment rate

U6 Unemployment Rate Portal Seven

The Big Lie 5.6 Unemployment

In contrast, under George W. Bush, the U-6 stayed below 10% for the vast majority of his presidency, and it didn't go above 12% until the last three months of his second term. That sharp upswing came because of the Great Recession in 2008, which was largely caused by massive--and disastrous--federal intervention in the home loan industry (via Fannie Mae, Freddie Mac, and the CRA), which led to the housing crisis, which in turn triggered--and largely caused--the Great Recession. See:

Did Deregulation and Capitalism Cause the Financial Crisis

(And it's worth noting that the Great Recession was needlessly made worse by senseless federal regulations such as the ridiculous federal mark-to-market regulations. Those regulations were later quietly changed, in recognition of the damage they had done during the early stages of the recession. For more on the damage done by the federal mark-to-market restrictions, see Suspend Mark-To-Market Now - Forbes and The mark to market fiasco.)

 

[BluesLegend]

Now factor in the new jobs under Democrats are paying about 30% less than the jobs lost.

 

[chikenwing]

The real question,is not who did what then,what will we do now,more of the same shit? or will we move in a different path.

 

[Faun]

The real unemployment rate, the one that most media talking heads rarely mention, is called the U-6, and according to the Department of Labor, the U-6 rate is now 11.3%. Under Obama the U-6 has been as high as 17%. See:

Chart What s the real unemployment rate

U6 Unemployment Rate Portal Seven

The Big Lie 5.6 Unemployment

In contrast, under George W. Bush, the U-6 stayed below 10% for the vast majority of his presidency, and it didn't go above 12% until the last three months of his second term. That sharp upswing came because of the Great Recession in 2008, which was largely caused by massive--and disastrous--federal intervention in the home loan industry (via Fannie Mae, Freddie Mac, and the CRA), which led to the housing crisis, which in turn triggered--and largely caused--the Great Recession. And that recession was needlessly made worse by senselss federal regulations such as the Sarbanes-Oxley mark-to-market regulation, which was later quietly changed in recognition of the damage it had done during the early stages of the recession. See:

Did Deregulation and Capitalism Cause the Financial Crisis

One BIG contrast is that unlike Bush, Obama inherited the worst recession since the Great Depression. That being the biggisest reason the U6 rate went up as high as 17.1%. And while the U3 rate is the official unemployment rate, by any measure, it almost doubled under Bush and has come down under Obama.

Your other nonsense about the CRA has been debunked repeatedly.

 

[Tom Sweetnam]

The real unemployment rate, the one that most media talking heads rarely mention, is called the U-6, and according to the Department of Labor, the U-6 rate is now 11.3%. Under Obama the U-6 has been as high as 17%. See:

Chart What s the real unemployment rate

U6 Unemployment Rate Portal Seven

The Big Lie 5.6 Unemployment

In contrast, under George W. Bush, the U-6 stayed below 10% for the vast majority of his presidency, and it didn't go above 12% until the last three months of his second term. That sharp upswing came because of the Great Recession in 2008, which was largely caused by massive--and disastrous--federal intervention in the home loan industry (via Fannie Mae, Freddie Mac, and the CRA), which led to the housing crisis, which in turn triggered--and largely caused--the Great Recession. And that recession was needlessly made worse by senselss federal regulations such as the Sarbanes-Oxley mark-to-market regulation, which was later quietly changed in recognition of the damage it had done during the early stages of the recession. See:

Did Deregulation and Capitalism Cause the Financial Crisis

One BIG contrast is that unlike Bush, Obama inherited the worst recession since the Great Depression. That being the biggisest reason the U6 rate went up as high as 17.1%. And while the U3 rate is the official unemployment rate, by any measure, it almost doubled under Bush and has come down under Obama.

Your other nonsense about the CRA has been debunked repeatedly.

Poor useful idiot.

 

[Faun]

The real unemployment rate, the one that most media talking heads rarely mention, is called the U-6, and according to the Department of Labor, the U-6 rate is now 11.3%. Under Obama the U-6 has been as high as 17%. See:

Chart What s the real unemployment rate

U6 Unemployment Rate Portal Seven

The Big Lie 5.6 Unemployment

In contrast, under George W. Bush, the U-6 stayed below 10% for the vast majority of his presidency, and it didn't go above 12% until the last three months of his second term. That sharp upswing came because of the Great Recession in 2008, which was largely caused by massive--and disastrous--federal intervention in the home loan industry (via Fannie Mae, Freddie Mac, and the CRA), which led to the housing crisis, which in turn triggered--and largely caused--the Great Recession. And that recession was needlessly made worse by senselss federal regulations such as the Sarbanes-Oxley mark-to-market regulation, which was later quietly changed in recognition of the damage it had done during the early stages of the recession. See:

Did Deregulation and Capitalism Cause the Financial Crisis

One BIG contrast is that unlike Bush, Obama inherited the worst recession since the Great Depression. That being the biggisest reason the U6 rate went up as high as 17.1%. And while the U3 rate is the official unemployment rate, by any measure, it almost doubled under Bush and has come down under Obama.

Your other nonsense about the CRA has been debunked repeatedly.

Poor useful idiot.

 

[Freewill]

The real unemployment rate, the one that most media talking heads rarely mention, is called the U-6, and according to the Department of Labor, the U-6 rate is now 11.3%. Under Obama the U-6 has been as high as 17%. See:

Chart What s the real unemployment rate

U6 Unemployment Rate Portal Seven

The Big Lie 5.6 Unemployment

In contrast, under George W. Bush, the U-6 stayed below 10% for the vast majority of his presidency, and it didn't go above 12% until the last three months of his second term. That sharp upswing came because of the Great Recession in 2008, which was largely caused by massive--and disastrous--federal intervention in the home loan industry (via Fannie Mae, Freddie Mac, and the CRA), which led to the housing crisis, which in turn triggered--and largely caused--the Great Recession. And that recession was needlessly made worse by senselss federal regulations such as the Sarbanes-Oxley mark-to-market regulation, which was later quietly changed in recognition of the damage it had done during the early stages of the recession. See:

Did Deregulation and Capitalism Cause the Financial Crisis

One BIG contrast is that unlike Bush, Obama inherited the worst recession since the Great Depression. That being the biggisest reason the U6 rate went up as high as 17.1%. And while the U3 rate is the official unemployment rate, by any measure, it almost doubled under Bush and has come down under Obama.

Your other nonsense about the CRA has been debunked repeatedly.

He and the dems made sure it was the biggest. Bush inherited a recession from Clinton but didn't make it worse as did the democrat controlled congress and Obama. I think you folks keep forgetting who was really in charge.

 

[CrusaderFrank]

Obama inherited a financial system already on the mend, Bear Stears and Lehmann were gone, Merrill Lynch and countrywide were absorbed, GS received $5B from Buffett. The biggest problems were the government lenders Fannie and Freddie

 

[mikegriffith1]

One BIG contrast is that unlike Bush, Obama inherited the worst recession since the Great Depression.

Wrong. The recession that Reagan faced was just as bad as, if not worse than, the one Obama "inherited" (I put "inherited" in quotes because the 2008 recession was caused by policies that Obama had supported.)

And Reagan overcame the 1982 recession in sterling fashion, far better than Obama overcame the 2008 recession. Obama's economic record pales in comparison to Reagan's.

That being the biggisest reason the U6 rate went up as high as 17.1%. And while the U3 rate is the official unemployment rate, by any measure, it almost doubled under Bush and has come down under Obama.

Huh? The U-6 rate stayed well below 10% for most of Bush's presidency, and it never got above 13%.

Your other nonsense about the CRA has been debunked repeatedly.

No, it has not. You just have not read the refutations of the supposed "debunking." Investor's Business Daily has published some superb research that refutes the left's denialism on this issue. Obviously you did not bother to read the linked article on the causes of the financial crisis, much less any of the articles linked therein.

 

[Faun]

One BIG contrast is that unlike Bush, Obama inherited the worst recession since the Great Depression.

Wrong. The recession that Reagan faced was just as bad as, if not worse than, the one Obama "inherited" (I put "inherited" in quotes because the 2008 recession was caused by policies that Obama had supported.)

And Reagan overcame the 1982 recession in sterling fashion, far better than Obama has overcame the 2008 recession. Obama's economic record pales in comparison to Reagan's.

That being the biggisest reason the U6 rate went up as high as 17.1%. And while the U3 rate is the official unemployment rate, by any measure, it almost doubled under Bush and has come down under Obama.

Huh? The U-6 rate stayed well below 10% for most of Bush's presidency, and it never got above 13%.

Your other nonsense about the CRA has been debunked repeatedly.

No, it has not. You just have not read the refutations of the supposed "debunking." Investor's Business Daily has published some superb research that refutes the left's denialism on this issue. Obviously you did not bother to read the linked article on the causes of the financial crisis, much less any of the articles linked therein.

Reagan's recession was not as deep as Bush's. GDP fell by 1.5% during Reagan's; compared to over 4% during Bush's and the U6 rate swelled by over 11 million people. That's why it was the Great Recession. As far as comparing the two, at this point in Reagan's presidency, the U3 rate was 6.6%. Under Obama, it's 5.7%. Though to Reagan's credit, he added more jobs and in a smaller population.

As far as the CRA. It's been debated plenty and I've read much about it. CRA loans accounted for just about 6% of the toxic residential loans and zero percent of the toxic commercial loans. Far below the threshold o cause the crecit markets to freeze up. The vast majority of the toxic loans were made by lenders who chose to give them out, not because they were required to by government regulations. And the reason they chose to take such risks is because the GSE's assumed the risk. That, along with the Fed lowering the federal fund rate to 2% and lower is what caused the financial collapse.

 

[NYcarbineer]

The real unemployment rate, the one that most media talking heads rarely mention, is called the U-6, and according to the Department of Labor, the U-6 rate is now 11.3%. Under Obama the U-6 has been as high as 17%. See:

Chart What s the real unemployment rate

U6 Unemployment Rate Portal Seven

The Big Lie 5.6 Unemployment

In contrast, under George W. Bush, the U-6 stayed below 10% for the vast majority of his presidency, and it didn't go above 12% until the last three months of his second term. That sharp upswing came because of the Great Recession in 2008, which was largely caused by massive--and disastrous--federal intervention in the home loan industry (via Fannie Mae, Freddie Mac, and the CRA), which led to the housing crisis, which in turn triggered--and largely caused--the Great Recession. See:

Did Deregulation and Capitalism Cause the Financial Crisis

(And it's worth noting that the Great Recession was needlessly made worse by senseless federal regulations such as the ridiculous federal mark-to-market regulations. Those regulations were later quietly changed, in recognition of the damage they had done during the early stages of the recession. For more on the damage done by the federal mark-to-market restrictions, see Suspend Mark-To-Market Now - Forbes and The mark to market fiasco.)

Obama inherited a 14.3% U-6 from Bush and it's now down to 11.3%.

And no it was not federal regulation that caused the recession.

 

[rightwinger]

So Bush was given a low "real unemployment rate" and allowed it to double on his watch

Obama has slashed the U6 by over 5%

 

[Faun]

The real unemployment rate, the one that most media talking heads rarely mention, is called the U-6, and according to the Department of Labor, the U-6 rate is now 11.3%. Under Obama the U-6 has been as high as 17%. See:

Chart What s the real unemployment rate

U6 Unemployment Rate Portal Seven

The Big Lie 5.6 Unemployment

In contrast, under George W. Bush, the U-6 stayed below 10% for the vast majority of his presidency, and it didn't go above 12% until the last three months of his second term. That sharp upswing came because of the Great Recession in 2008, which was largely caused by massive--and disastrous--federal intervention in the home loan industry (via Fannie Mae, Freddie Mac, and the CRA), which led to the housing crisis, which in turn triggered--and largely caused--the Great Recession. See:

Did Deregulation and Capitalism Cause the Financial Crisis

(And it's worth noting that the Great Recession was needlessly made worse by senseless federal regulations such as the ridiculous federal mark-to-market regulations. Those regulations were later quietly changed, in recognition of the damage they had done during the early stages of the recession. For more on the damage done by the federal mark-to-market restrictions, see Suspend Mark-To-Market Now - Forbes and The mark to market fiasco.)

Obama inherited a 14.3% U-6 from Bush and it's now down to 11.3%.

And no it was not federal regulation that caused the recession.

Compared to Bush, who inherited it at 7.3% and left it at 14.2%.

 

[AdvancingTime]

We are coming face to face with a harsh reality. The long term implications of poor job creation are massive. We are seeing that a huge number of people have dropped out of the work force and others locked in low paying jobs. Often these people have little in the way of savings, this means the burden of caring for them will be transferred to society. If to many people shift into this category we will slowly wear down through attrition. Finding a fair way to share and balance the work load that goes on every day is one of the most important problems facing our modern world.

Failure to discover a solution to this dilemma bodes poorly for our consumer driven economy and adds to the toxic problem of inequality. Many of the numbers and budget projections of the government have been based on far better employment numbers then we are currently facing or will be facing if this continues. The article below looks at the long-term implication of poor job creation and how it will drastically impact in a negative way both the wealth and future of America.

http://brucewilds.blogspot.com/2013/09/implications-of-poor-job-creation.html

 

[mikegriffith1]

Reagan's recession was not as deep as Bush's. GDP fell by 1.5% during Reagan's; compared to over 4% during Bush's and the U6 rate swelled by over 11 million people. That's why it was the Great Recession. As far as comparing the two, at this point in Reagan's presidency, the U3 rate was 6.6%. Under Obama, it's 5.7%. Though to Reagan's credit, he added more jobs and in a smaller population.

Where to start. . . . The U-3 rate hit over 10% in the recession Reagan faced. GDP loss can vary in a recession, depending on the nature of the recession, which sectors are hit the worst, etc. But U-3 went over 10% in the 1982 recession, and there were just about as many bank failures in 1982 recession as there were in the 2008 recession.

If you've done any kind of balanced research, you surely know that Reagan's economic record is far better than Obama's. The comparison is not even close.

As far as the CRA. It's been debated plenty and I've read much about it. CRA loans accounted for just about 6% of the toxic residential loans and zero percent of the toxic commercial loans. Far below the threshold o cause the crecit markets to freeze up. The vast majority of the toxic loans were made by lenders who chose to give them out, not because they were required to by government regulations. And the reason they chose to take such risks is because the GSE's assumed the risk. That, along with the Fed lowering the federal fund rate to 2% and lower is what caused the financial collapse.

Let me just ask you this: Is it just a big, whopping coincidence that sub-prime loans stayed at below 2% of new home loans for decades before 1995 and then suddenly began to rise--and rise rapidly--after 1995, and especially after 1998, after the enforcement of the CRA was substantially changed? Just a staggering coincidence? I again suggest your broaden your research horizons and read, for starters, the articles linked in my financial crisis article.

And those "GSEs" were Freddie and Fannie. They massively distorted the mortgage industry by securing or financing over $1 trillion in sub-prime and alt-A loans. Had it not been for Freddie and Fannie's reckless, liberal-driven intervention, those loans never would have been made and therefore never could have been bundled into toxic assets in the first place.

And who was it who blocked every attempt to reform Freddie and Fannie to stop them from such reckless behavior? Which party trotted out their usual rich-vs.-poor demagoguery and played the race card and implied that people who wanted to stop Freddie and Fannie from backing so many sub-prime home loans didn't want minorities and the poor to own homes? If anyone has any doubt, this is all documented on YouTube, among other sources.

 

[Nyvin]

Where to start. . . . The U-3 rate hit over 10% in the recession Reagan faced. GDP loss can vary in a recession, depending on the nature of the recession, which sectors are hit the worst, etc. But U-3 went over 10% in the 1982 recession, and there were just about as many bank failures in 1982 recession as there were in the 2008 recession.

If you've done any kind of balanced research, you surely know that Reagan's economic record is far better than Obama's. The comparison is not even close.

The thing with Reagan's recession is that the bank failures kept going all the way until a few years after Clinton's term started. With Obama the bank failures were mostly over by 2012.

Year - Number of bank failures
2014 - 18
2013 - 23
2012 - 50
2011 - 92
2010 - 157
2009 - 140
2008 - 30
2007 - 3
2006 - 0
2005 - 0
2004 - 4
2003 - 3
2002 - 11
2001 - 4
2000 - 7
1999 - 8
1998 - 3
1997 - 1
1996 - 6
1995 - 8
1994 - 15
1993 - 50
1992 - 181
1991 - 271
1990 - 382
1989 - 534
1988 - 470
1987 - 262
1986 - 204
1985 - 180
1984 - 106
1983 - 99
1982 - 119
1981 - 40
1980 - 22

Also there isn't a significant difference between Reagan and Obama with unemployment, Obama has performed slightly better but both of them had to deal with situations outside of their control.

 

[Faun]

Reagan's recession was not as deep as Bush's. GDP fell by 1.5% during Reagan's; compared to over 4% during Bush's and the U6 rate swelled by over 11 million people. That's why it was the Great Recession. As far as comparing the two, at this point in Reagan's presidency, the U3 rate was 6.6%. Under Obama, it's 5.7%. Though to Reagan's credit, he added more jobs and in a smaller population.

Where to start. . . . The U-3 rate hit over 10% in the recession Reagan faced. GDP loss can vary in a recession, depending on the nature of the recession, which sectors are hit the worst, etc. But U-3 went over 10% in the 1982 recession, and there were just about as many bank failures in 1982 recession as there were in the 2008 recession.

If you've done any kind of balanced research, you surely know that Reagan's economic record is far better than Obama's. The comparison is not even close.

As far as the CRA. It's been debated plenty and I've read much about it. CRA loans accounted for just about 6% of the toxic residential loans and zero percent of the toxic commercial loans. Far below the threshold o cause the crecit markets to freeze up. The vast majority of the toxic loans were made by lenders who chose to give them out, not because they were required to by government regulations. And the reason they chose to take such risks is because the GSE's assumed the risk. That, along with the Fed lowering the federal fund rate to 2% and lower is what caused the financial collapse.

Let me just ask you this: Is it just a big, whopping coincidence that sub-prime loans stayed at below 2% of new home loans for decades before 1995 and then suddenly began to rise--and rise rapidly--after 1995, and especially after 1998, after the enforcement of the CRA was substantially changed? Just a staggering coincidence? I again suggest your broaden your research horizons and read, for starters, the articles linked in my financial crisis article.

And those "GSEs" were Freddie and Fannie. They massively distorted the mortgage industry by securing or financing over $1 trillion in sub-prime and alt-A loans. Had it not been for Freddie and Fannie's reckless, liberal-driven intervention, those loans never would have been made and therefore never could have been bundled into toxic assets in the first place.

And who was it who blocked every attempt to reform Freddie and Fannie to stop them from such reckless behavior? Which party trotted out their usual rich-vs.-poor demagoguery and played the race card and implied that people who wanted to stop Freddie and Fannie from backing so many sub-prime home loans didn't want minorities and the poor to own homes? If anyone has any doubt, this is all documented on YouTube, among other sources.

GDP is the leading economic indicator of a recession. Its role is far more significant than what you portray. Bush's recession is the worst economic period in the U.S. since the Great Depression.

As far as subrime lending, 3/4ths of the institutions writing subprime loans were not subject to CRA laws. Do you understand that? Banks were doling out money because they wanted to, not because they were required by CRA regulations. And they wanted to because the GSE's were standing behind those loans. And while you're right that subprime lending took off in the mid-90's, it exploded to unsustainable levels in the early to mid 2000's following the Fed lowering the federal fund to under 2%...

As far as your nonsense of "Liberal-driven intervention" of the GSE's, Clinton was a Democrat, granted, but Congress was in Republican hands and Bush was no Liberal, yet Bush waived down payment requirements in his American Dream Act; and of course, Bush's plans to increase home ownership by 5.5 million households was driven with the GSE's, which you pretend were influenced by Liberals, while ignoring the work done by Conservatives...

BUSH MINORITY HOMEOWNERSHIP PLAN RESTS HEAVILY ON FANNIE AND FREDDIE

As far as your pinning blame on preventing reform of the GSE's on Democrats ... that ignores the reality that Republicans refused to get a bill to Bush's desk with such reform. While it's true that Democrats were on the wrong side of the issue, it's also true that they were not the party running Congress. Republicans were and Republican leadership wouldn't let a bill pass through the Senate. There was nothing short of a filibuster Democrats could have resorted to in order to block such a measure; but Democrats didn't filibuster any GSE reform bills. They didn't have to. One bill passed the House. Bush spit on it and Frist wouldn't put it on the Senate's legislative calendar. Two more bills made it through committee in the Senate. Again, Republican leadership didn't push either one through for a vote by the full Senate. To Bush's credit, he was asking Congress for GSE reform since about 2002 or 2003. The Republican-led Congress wouldn't give him a bill to sign. It wasn't until Democrats took over in 2007 that a bill passed the House, and then the Senate and president in 2008. But by then, it was too late. The damage occurred years earlier.

Sorry, but you don't get to re-write history.

 

[mikegriffith1]

In response to the liberal denialism about the government's role in the housing crisis and the financial crisis via such things as the CRA and Freddie and Fannie, here's a small part of a long article in The American Spectator titled "The True Origins of This Financial Crisis" by Peter Wallison:

As originally enacted in 1977, the CRA vaguely mandated regulators to consider whether an insured bank was serving the needs of the “whole” community. For 16 years, the act was invoked rather infrequently, but 1993 marked a decisive turn in its enforcement. What changed? Substantial media and political attention was showered upon a 1992 Boston Federal Reserve Bank study of discrimination in home mortgage lending. This study concluded that, while there was no overt discrimination in banks’ allocation of mortgage funds, loan officers gave whites preferential treatment. The methodology of the study has since been questioned, but at the time it was highly influential with regulators and members of the incoming Clinton administration; in 1993, bank regulators initiated a major effort to reform the CRA regulations.

In 1995, the regulators created new rules that sought to establish objective criteria for determining whether a bank was meeting CRA standards. Examiners no longer had the discretion they once had. For banks, simply proving that they were looking for qualified buyers wasn’t enough. Banks now had to show that they had actually made a requisite number of loans to low- and moderate-income (LMI) borrowers. The new regulations also required the use of “innovative or flexible” lending practices to address credit needs of LMI borrowers and neighborhoods. Thus, a law that was originally intended to encourage banks to use safe and sound practices in lending now required them to be “innovative” and “flexible.” In other words, it called for the relaxation of lending standards, and it was the bank regulators who were expected to enforce these relaxed standards.

The effort to reduce mortgage lending standards was led by the Department of Housing and Urban Development through the 1994 National Homeownership Strategy, published at the request of President Clinton. Among other things, it called for “financing strategies, fueled by the creativity and resources of the private and public sectors, to help homeowners that lack cash to buy a home or to make the payments.” Once the standards were relaxed for low-income borrowers, it would seem impossible to deny these benefits to the prime market. Indeed, bank regulators, who were in charge of enforcing CRA standards, could hardly disapprove of similar loans made to better-qualified borrowers.

Sure enough, according to data published by the Joint Center for Housing Studies of Harvard University, from 2001 through 2006, the share of all mortgage originations that were made up of conventional mortgages (that is, the 30-year fixed-rate mortgage that had always been the mainstay of the U.S. mortgage market) fell from 57.1 percent in 2001 to 33.1 percent in the fourth quarter of 2006. Correspondingly, sub-prime loans (those made to borrowers with blemished credit) rose from 7.2 percent to 18.8 percent, and Alt-A loans (those made to speculative buyers or without the usual underwriting standards) rose from 2.5 percent to 13.9 percent. Although it is difficult to prove cause and effect, it is highly likely that the lower lending standards required by the CRA influenced what banks and other lenders were willing to offer to borrowers in prime markets. Needless to say, most borrowers would prefer a mortgage with a low down payment requirement, allowing them to buy a larger home for the same initial investment. (The True Origins of This Financial Crisis The American Spectator)
​

The whole article is a great read and very informative, and it places blame on a bipartisan basis.

 

[Faun]

In response to the liberal denialism about the government's role in the housing crisis and the financial crisis via such things as the CRA and Freddie and Fannie, here's a small part of a long article in The American Spectator titled "The True Origins of This Financial Crisis" by Peter Wallison:

As originally enacted in 1977, the CRA vaguely mandated regulators to consider whether an insured bank was serving the needs of the “whole” community. For 16 years, the act was invoked rather infrequently, but 1993 marked a decisive turn in its enforcement. What changed? Substantial media and political attention was showered upon a 1992 Boston Federal Reserve Bank study of discrimination in home mortgage lending. This study concluded that, while there was no overt discrimination in banks’ allocation of mortgage funds, loan officers gave whites preferential treatment. The methodology of the study has since been questioned, but at the time it was highly influential with regulators and members of the incoming Clinton administration; in 1993, bank regulators initiated a major effort to reform the CRA regulations.

In 1995, the regulators created new rules that sought to establish objective criteria for determining whether a bank was meeting CRA standards. Examiners no longer had the discretion they once had. For banks, simply proving that they were looking for qualified buyers wasn’t enough. Banks now had to show that they had actually made a requisite number of loans to low- and moderate-income (LMI) borrowers. The new regulations also required the use of “innovative or flexible” lending practices to address credit needs of LMI borrowers and neighborhoods. Thus, a law that was originally intended to encourage banks to use safe and sound practices in lending now required them to be “innovative” and “flexible.” In other words, it called for the relaxation of lending standards, and it was the bank regulators who were expected to enforce these relaxed standards.

The effort to reduce mortgage lending standards was led by the Department of Housing and Urban Development through the 1994 National Homeownership Strategy, published at the request of President Clinton. Among other things, it called for “financing strategies, fueled by the creativity and resources of the private and public sectors, to help homeowners that lack cash to buy a home or to make the payments.” Once the standards were relaxed for low-income borrowers, it would seem impossible to deny these benefits to the prime market. Indeed, bank regulators, who were in charge of enforcing CRA standards, could hardly disapprove of similar loans made to better-qualified borrowers.

Sure enough, according to data published by the Joint Center for Housing Studies of Harvard University, from 2001 through 2006, the share of all mortgage originations that were made up of conventional mortgages (that is, the 30-year fixed-rate mortgage that had always been the mainstay of the U.S. mortgage market) fell from 57.1 percent in 2001 to 33.1 percent in the fourth quarter of 2006. Correspondingly, sub-prime loans (those made to borrowers with blemished credit) rose from 7.2 percent to 18.8 percent, and Alt-A loans (those made to speculative buyers or without the usual underwriting standards) rose from 2.5 percent to 13.9 percent. Although it is difficult to prove cause and effect, it is highly likely that the lower lending standards required by the CRA influenced what banks and other lenders were willing to offer to borrowers in prime markets. Needless to say, most borrowers would prefer a mortgage with a low down payment requirement, allowing them to buy a larger home for the same initial investment. (The True Origins of This Financial Crisis The American Spectator)
​

The whole article is a great read and very informative, and it places blame on a bipartisan basis.

Very informative read, thanks. However, while they lay out some history of the CRA, their guess-essment is off base. Again, for the reasons stated earlier, the CRA had little to do with the real-estate explosion which led to the collapse of the housing markets and the credit markets to lock up.

What event do you think occurred to cause so many people to go into foreclosure in such a short period of time?

 

[edthecynic]

The real unemployment rate, the one that most media talking heads rarely mention, is called the U-6, and according to the Department of Labor, the U-6 rate is now 11.3%. Under Obama the U-6 has been as high as 17%. See:

In contrast, under George W. Bush, the U-6 stayed below 10% for the vast majority of his presidency,

The U-6 was NEVER the "real" unemployment rate, and Bush's U-6 was never 10%, bush had the BLS cook the numbers. See that knife cuts both ways!!!