The Financial Crisis Began with the Democrats

[rayboyusmc]

SOUTH BRONX, September 28 -- First on the fringes and now on Fox News, the Community Reinvestment Act is being blamed by some for today's financial crisis. The argument is that by encouraging FDIC-insured banks to lend in lower income neighborhoods, the government -- read, Democrats, from Jimmy Carter to Bill Clinton -- created the explosion in high interest rate subprime loans.


There's a major factual problem, though: with a single exception, no bank sought CRA credit for its subprime loans. And the investment banks which were purchasing, bundling and securitizing the loans were not covered by CRA. Bear Stearns was not covered by CRA, but was bailed out by the Federal Reserve Board for $30 billion dollars. AIG, an insurance company, was not covered by CRA, but its subprime activities have led to a $75 billion loan from the Federal Reserve, whose chairman Ben Bernanke nevertheless claimed to Inner City Press that the Fed does not control AIG, despite owning warrants for 79% of its stock, click here for that story......


There is more than enough blame to discredit both political parties. But it's not the Community Reinvestment Act statute that's to blame. If anything, the CRA provided a venue by which many of the problems were raised, and some were even solved. When Atlanta-based SunTrust, for example, applied to the Federal Reserve for approval of a merger in Memphis, Fair Finance Watch showed the Fed that SunTrust was lending to a slew of predatory lenders. SunTrust ultimately committed to get out of some of these fields, and had its application approved. That was CRA at work, in a way conveniently not mentioned in the sloppy arguments being advanced.

Inner City Press: Investigative Reporting from the United Nations

 

[del]

Inner City Press: Investigative Reporting from the United Nations

don't you have a youtube clip? that's definitive proof.

 

[Chris]

McCain's Economic Adviser is ex-Texas Sen. Phil Gramm. On Dec. 15, 2000, hours before Congress was to leave for Christmas recess, Gramm had a 262-page amendment slipped into the appropriations bill. It forbade federal agencies to regulate the financial derivatives that greased the skids for passing along risky mortgage-backed securities to investors. And that, my friends, is why everything's falling apart. That is why the taxpayers are now on the hook for the follies of Fannie Mae, Freddie Mac, Bear Stearns and now the insurance giant AIG to the tune of $700 billion.

 

[PoliticalChic]

The idea that only poor people defaulting on their loans caused this problem is insane. I know so many people who have lost their homes. Some because they lost their jobs and some because they just walked away from a very bad investment.

And, the idea that it's the Democrats fault when the GOP controlled everything for 6 of the last 7 years is

1. In their efforts to project that lie about racism existing in America....it clearly doesn't exist.....there is the standard one about banks...in business to lend money to make money....the Democrats claim "redlining" is about not lendindg to folks due to their skin color.

(Psst....profits are green, not black or white)

2. " Congress passed a bill in 1975 requiring banks to provide the government with information on their lending activities in poor urban areas. Two years later, it passed the Community Reinvestment Act (CRA), which gave regulators the power to deny banks the right to expand if they didnt lend sufficiently in those neighborhoods. In 1979 the FDIC used the CRA to block a move by the Greater NY Savings Bank for not enough lending.

In 1986, when the Association of Community Organizations for Reform Now (Acorn) threatened to oppose an acquisition by a southern bank, Louisiana Bancshares, until it agreed to new flexible credit and underwriting standards for minority borrowersfor example, counting public assistance and food stamps as income.

In 1992, the Boston Fed produced an extraordinary 29-page document that codified the new lending wisdom. Conventional mortgage criteria, the report argued, might be unintentionally biased because they didnt take into account the economic culture of urban, lower-income and nontraditional customers. Lenders should thus consider junking the industrys traditional income-to-payments ratio and stop viewing an applicants lack of credit history as a negative factor. Further, if applicants had bad credit, banks should consider extenuating circumstanceseven though a study by mortgage insurance companies would soon show, not surprisingly, that borrowers with no credit rating or a bad one were far more likely to default. If applicants didnt have enough savings for a down payment, the Boston Fed urged, banks should allow loans from nonprofits or government assistance agencies to count toward one. A later study of Freddie Mac mortgages would find that a borrower who made a down payment with third-party funds was four times more likely to default, a reminder that traditional underwriting standards werent arbitrary but based on historical lending patterns."

Obsessive Housing Disorder

Justin Sullivan/Getty ImagesLax lending standards encouraged by the government contributed to our current foreclosure crisis. In December, the New York Times published a 5,100-word article charging that the Bush administration’s housing policies had “stoked” the foreclosure crisis—and thus the...

www.city-journal.org

3. The Dems used the hoax to get votes, never mind it created the mortgage meltdown wnen banks were forced to give NINJA loans....no income, no job or assets loans.

4. If the industry hadn't been forced to give loans that they knew wouldn't be repaid.....no mortgage meltdown.
Thank you, Democrats.





5. But wait!!!
Chief Foot-In-Mouth just let the cat out of the bag!!!!!!!!!!!!

"LIBERAL RACISM: Warren Says ‘Black Borrowers’ are Unable to Pay Down ‘Debt’​

By The First
4 hours ago
Senator Elizabeth Warren raised eyebrows across social media Monday when she suggested “black borrowers” are unable to pay down their “original debt” and owe more than “white borrowers.”
“20 years after taking out their student loans, the typical white borrower owes just 6% of their original debt. But the typical Black borrower? 95% of their original debt. Student debt is a racial justice issue and it’s time for
@POTUS
to #CancelStudentDebt,” posted Warren on Twitter.

LIBERAL RACISM: Warren Says ‘Black Borrowers’ are Unable to Pay Down ‘Debt’

LIBERAL RACISM: Warren Says ‘Black Borrowers’ are Unable to Pay Down ‘Debt’

www.thefirsttv.com

So the banks were right......and "REDLINING" isn't racist......it's economically correct?????????????