The GOP Blames the Victim

[chopcrazy]

I explain it to people like you like this:

If Reagan spent 6 & HW Bush spent 8 and GW Bush spent 10, Clinton spent 2.

It is more like
Reagan spent 1.5
HW Bush spent 1.1
Clinton spent 1
GW Bush spent 3.5

- excludes the surplus from off budget items like social security

Simple analysis shows that during Clinton's years revenues rose 7-10% per year while outlays 2-4%. GW had revenues decreasing his first four years 4-10% per year and outlays increasing 4-9%. To get budget back in line, I think that revenues need to increase about 200B and outalys need to be cut 300B.

I doubt the next president or congress will have the intestinal fortitude to get budget balanced. Bush has not and the next candidates/congress do not indicate it is too concerning.

 

[RetiredGySgt]

Palin has a road that leads to nowhere to accompany that bridge too...

It's the lenders fault of setting up the system the way it did and it's the borrowers fault for being too stupid, gullible or just plain desparate to fall into the trap.

Retards one and all, the Bridge road lead to a bridge that lead to the ONLY airport for the community in question. A bridge would have increased the accessability of the Airport beyond what a ferry was providing.

But of course to KNOW THAT, you would have to be smarter then a dumb ass liberal with their one liners.

 

[Care4all]

Wow, you are just an imbecile aren't you?


I see you erased your comment on the 2001 year?

Did you realize those numbers belong to Clinton?

Keep in mind that President Bush took office in January 2001 and his first budget took effect October 1, 2001 for the year ending September 30, 2002 (FY2002). So the $133.29 billion deficit in the year ending September 2001 was Clinton's. Granted, Bush supported a tax refund where taxpayers received checks in 2001. However, the total amount refunded to taxpayers was $38 billion . So even if we assume that $38 billion of the FY2001 deficit was due to Bush's tax refunds which were not part of Clinton's last budget, that still means that Clinton's last budget produced a deficit of 133.29 - 38 = $95.29 billion.

Clinton clearly did not achieve a surplus and he didn't leave President Bush with a surplus.


Since you don't like to read the sites I will list it here for you so maybe you can understand.

So why do they said he had a surplus?

As is usually the case in claims such as this, it has to do with Washington doublespeak and political smoke and mirrors.

Understanding what happened requires understanding two concepts of what makes up the national debt. The national debt is made up of public debt and intergovernmental holdings. The public debt is debt held by the public, normally including things such as treasury bills, savings bonds, and other instruments the public can purchase from the government. Intergovernmental holdings, on the other hand, is when the government borrows money from itself--mostly borrowing money from social security.

Looking at the makeup of the national debt and the claimed surpluses for the last 4 Clinton fiscal years, we have the following table:


Year Year Claimed Public Inter-Gov Total national
End Surplus Debt Holdings Debt

97 9/30/97 0 3.78T 1.62T 5.413T
98 9/30/98 69B 3.73T 1.79T 5.52T
down 69B up 168B UP 113B
99 9/30/99 122B 3.63T 2.02T 5.65T
down 97B up 227B UP 130B
00 9/29/00 230B 3.40T 2.26T 5.67T
down 230B up 248B 17.98B
01 9/28/01 0 3.339 T 2.46T 5.807T
down 66B UP 199B Up 133B

T= Trillion
B= Billion


I cant make the chart look nice

The Myth of the Clinton Surplus

to see the chart I am refrencing


Notice that while the public debt went down in each of those four years, the intergovernmental holdings went up each year by a far greater amount--and, in turn, the total national debt (which is public debt + intergovernmental holdings) went up. Therein lies the lie.

When Clinton (and others) said that he had paid down the national debt, that was patently false--as can be seen, the national debt went up every single year. What Clinton did do was pay down the public debt--notice that the claimed surplus is relatively close to the decrease in the public debt for those years. But he paid down the public debt by borrowing far more money in the form of intergovernmental holdings.

Interestingly, this most likely was not even a conscious decision by Clinton. The Social Security Administration is legally required to take all its surpluses and buy U.S. Government securities, and the U.S. Government readily sells those securities--which automatically and immediately becomes intergovernmental holdings. The economy was doing well due to the dot-com bubble and people were earning a lot of money and paying a lot into Social Security. Since Social Security had more money coming in than it had to pay in benefits to retired persons, all that extra money was immediately used to buy U.S. Government securities. The government was still running deficits, but since there was so much money coming from excess Social Security contributions there was no need to borrow more money directly from the public. As such, the public debt went down while intergovernmental holdings continued to skyrocket.

The net effect was that the national debt most definitely did not get paid down because we did not have a surplus. The government just covered its deficit by borrowing money from Social Security rather than the public.

Consider the following quotes (and accompanying links) that demonstrate how people have known this for years:


An overall "downsizing" of government and a virtual end to the arms race have contributed to the surplus, but the vast majority is coming from excess Social Security taxes being paid by the workforce in an attempt to keep Social Security benefit checks coming once the "baby-boomers" start to retire.
Of the $142 billion surplus projected by the end of 2000, $137 billion will come from excess Social Security taxes.
When these unified budget numbers are separated into Social Security and non-Social Security components, however, it becomes evident that all of the projected surplus throughout this period is attributable to Social Security. The remainder of the budget will remain in deficit throughout the next decade.
Despite a revenue shortfall, full benefits are expected to be paid out between 2017 and 2041. The system will draw on its trust fund, a collection of special-issue bonds from the government, which borrowed prodigiously from the program's surplus over the years. But since the country is already running a deficit, the government will have to borrow more money to pay back its debt to Social Security. That's a little like giving with one hand and taking away with the other.
The surplus deception is clearly discernible in the statistics of national debt. While the spenders are boasting about surpluses, the national debt is rising year after year. In 1998, the first year of the legerdemain surplus, it rose from $5.413 trillion to $5.526 trillion, due to a deficit of $112.9 billion... The federal government spends Social Security money and other trust funds which constitute obligations to present and future recipients. It consumes them and thereby incurs obligations as binding as those to the owners of savings bonds. Yet, the Treasury treats them as revenue and hails them for generating surpluses. If a private banker were to treat trust fund deposits as income and profit, he would face criminal charges.


Are intergovernmental holdings really debt?

Absolutely! The intergovernmental debt is every bit as real as the public debt. It's not "a wash" simply because you owe the government owes the money to "itself."

As I explained in a previous article, Social Security is legally required to use all its surpluses to buy U.S. Government securities. From Social Security's standpoint, it has a multi-trillion dollar reserve in the form of U.S. Government securities. When the Social Security system starts to falter due to insufficient contributions to pay for all the benefits of retiring baby-boomers, probably around 2017, it will start cashing those securities and will expect the U.S. Government to pay it back, with interest. The problem is, the government doesn't have the money. The money has already been spent--in part, effectively, to pay down the public debt under Clinton.

The Federal Government cannot just wave a magic wand and somehow "write off" the intergovernmental debt. Essentially, citizens invested money in Social Security and Social Security invested that money in the Federal Government. Now Social Security effectively owes you money (in the form of future retirement benefits) and won't be able to pay you that money if the Federal Government just cancels the intergovernmental debt. The only way the Federal Government can "write off" intergovernmental debt is if it simultaneously eliminates the Social Security system. That might very well be a good idea, but it isn't likely. And Social Security will go bankrupt in about 2017 if the Federal Government doesn't honor those intergovernmental holdings as real debt.

In short, if the government doesn't pay back intergovernmental holdings, other government agencies (like Social Security) will fail. Since allowing Social Security to fail is not a politically viable option, the debt represented by intergovernmental holdings is just as real as the public debt. It can't just be eliminated by some fancy accounting trick or political maneuvering. If it were possible, believe me, politicians would have done it already and taken credit for reducing the national debt by trillions of dollars.


that comes from stats from the fucking treasury

Read th elinks I posted for the full articles.

Now please remove your foot from your mouth

he balanced the BUDGET, and no longer had a budget deficit... are you denying this....?

i have never said he did anything with the national debt, but i have said that clinton with the republican congress, balanced the BUDGET and reduced budget deficits to budget surplusses............

something this president and previous 2 republican presidents, were never able to do...

 

[Andrew2382]

yeah, and how did he pay it down

He jacked social security

"Clinton’s lock-box plan is nothing more than a scheme to use more than $3 trillion in Social Security surpluses to buy down federal debt. In exchange, the Social Security trust fund gets another $3 trillion worth of IOUs. To be sure, most Americans would rather pay down the debt than use Social Security’s surpluses to fund pork barrel projects. But make no mistake, once that money is spent – to buy down debt or fund new programs – it will not be there to cover Social Security’s long-term liabilities. "

Clinton?s $3 Trillion Raid on Social Security -- FreedomWorks.org

 

[Care4all]

Retards one and all, the Bridge road lead to a bridge that lead to the ONLY airport for the community in question. A bridge would have increased the accessability of the Airport beyond what a ferry was providing.

But of course to KNOW THAT, you would have to be smarter then a dumb ass liberal with their one liners.

why should i have to pay for a bridge and road to a very small servicing airport in alaska with my tax money when their state is running a budget surplus?

i shouldn't, is the answer imo...

alaska got $700 million in earmarks of our taxes that one year alone....

 

[dilloduck]

when 61% of the subprime borrowers QUALIFIED for a Conventional ''A'' Prime mortgage with lower closing fees, better terms, and lower interest rates, but chose the subprime loan INSTEAD, then YES, logically, i would say they were TRICKED or Fooled by the PERP.....

can't see how anyone could think otherwise....

How about making a bad choice as a possibility ?

 

[WillowTree]

why should i have to pay for a bridge and road to a very small servicing airport in alaska with my tax money when their state is running a budget surplus?

i shouldn't, is the answer imo...

alaska got $700 million in earmarks of our taxes that one year alone....

why shouldn't you? You happily hand it out hand over fist for illegals and abortions, and a lot of stuff I don't like spending my taxpayer dollars on.

 

[Andrew2382]

Something like this Willow?


WHAT COSTS MORE PER YEAR THAN THE IRAQ WAR?


Answer: Illegal immigration!

I hope the following 14 reasons are forwarded over and over again until They
are read so many times that the reader gets sick of reading them. I have
included the URL's for verification of the following facts:


1. $11 Billion to $22 billion is spent on welfare to illegal aliens each year.
FAIR: Immigration and Welfare

2. $2.2 Billion dollars a year is spent on food assistance programs such as
food stamps, WIC, and free school lunches for illegal aliens.
http://www.cis.org/articles/2004/f\iscalexec.html http://www.cis.org/articles/2004/f/iscal exec.HTML>


3. $2.5 Billion dollars a year is spent on Medicaid for illegal aliens.
Center for Immigration Studies


4. $12 Billion dollars a year is spent on primary and secondary school
Education for children here illegally and they cannot speak a word of English!
Http://transcripts.CNN.com/TRA! NSCRIPT S/0604/01/ldt0.HTML


5. $17 Billion dollars a year is spent for education for the American-born
children of illegal aliens, known as anchor babies.
CNN.com - Transcripts

6. $3 Million Dollars a DAY is spent to incarcerate illegal aliens
CNN.com - Transcripts

7. 30% percent of all Federal Prison inmates are illegal aliens.
CNN.com - Transcripts

8. $90 Billion Dollars a year is spent on illegal aliens for Welfare And
Social Services by the American taxpayers.
http://premium.cnn.com/TRANSCIPTS/0610/29/ldt.01.html

9. $200 Billion Dollars a year in suppressed American wages are caused
By the illegal aliens.
http://transcripts! CNN.co m/TRANSCRIPTS/0604/01/ldt.01.HTML

10. The illegal aliens in the United States have a crime rate that's
Two-and-a-half times that of white non-illegal aliens. In particular,
Their children, are going to make a huge additional crime problem in the US .
Http://transcripts.CNN.com/TRANSCRIPTS/0606/12/ldt.01HTML

11. During the year of 2005 there were 4 to 10 MILLION illegal aliens
That crossed our Southern Border also, as many as 19,500 illegal aliens
From Terrorist Countries. Millions of pounds of drugs, cocaine, meth,
Heroin and marijuana, crossed into the U. S from the Southern border

Homeland Security Report.
Http://tinyurl.com/t9sht

12. The National Policy Institute, 'estimated that the total cost of
Mass deportation would be between $206 and $230 billion or an average
Cost of between $41 and $46 billion annually! Over a five year period.'
http://www.nationalpolicyinstitute.org/pdf/deportation.pdf

13. In 2006 illegal aliens sent home $45 BILLION in remittances back to
Their countries of origin.
Http:/ /www.rense.com/general75/niht.htm

14. 'The Dark Side of Illegal Immigration: Nearly One Million Sex Crimes
Committed by Illegal Immigrants In The United States '.
http://www.drdsk.com/articleshtml

Total cost is a whooping... $338.3 BILLION A YEAR!!!
If this doesn't bother you then just delete the message, but on the
Other hand, if it does raise the hair on the back of your neck, then forward it.
Snopes is provided for doubters:
snopes.com: Bank of America Credit Cards for Illegals

 

[Larkinn]

What you fail to understandis the lenders/anks were forced to set up the system that way.

When Clinton put in the major provisions to the CRA (Community Reinvestment Act), banks were forced to have a portion of their loan portfolil go to low income areas. If they did not do this they woul dhave to pay penalties and they were not allowed to expand!

How do you make yourself accesible to low income people who would not qualify for a normal loan.

NO CREDIT
NO PROBLEM
SIGN HERE

Sub-Prime Mortgages became rampant after 1995, look it up.

Before 95, the housing market and inflation went up at a dead equal pace, after 95 the housing market flew right by inflation creating a huge bubble.

Except that for 8 years its been BUSH in power. So why did subprime loans continue even after Bush weakened CRA in '05? Oh wait, its because banks weren't intimidated into it, they were making profits off of it.

 

[Diuretic]

Now I get the rules. ravi posts an authoritative source. The braying jackasses bring the "what about Clinton?" chorus.

From the article - But I had forgotten about conservatives' extraordinary instincts for blame-evasion.

And here it is, right here in this thread! The blame-evasion right on cue. Bray on jackasses! Bray on!

 

[Ravi]

heh, it shouldn't surprise me, but for some reason it still does. Republicans don't even want to know what Wall Street did, they are bound and determined to blame their stupid mistakes on everyone but the actual culprits.

What a bunch of assholes.

 

[Larkinn]

Ah, so lenders gave people money knowing they wouldn't get it back? Sounds like a sure fire way to make money to me.

Actually it was. Because they gave you some money back, and then lost their house, foreclosed, you got it back and now its worth more. It was a sure fire way to make money.

And then housing prices started decreasing, and everyone got fucked.

 

[Care4all]

why shouldn't you? You happily hand it out hand over fist for illegals and abortions, and a lot of stuff I don't like spending my taxpayer dollars on.

abortions are not paid for with any federal money, i believe the republicans have made certain of such with legislation, which i happen to agree with....tax monies should not be used for abortions though i do feel it can be used for birth control....

I don't agree with using tax payer's money for illegals either, and i think major reform and changes are needed regarding immigration and illegal immigration...i do believe it is the businesses that need to be cracked down on, you kill the jobs for illegals, you stop the illegals....

So your "gotcha" doesn't hold water!

Care

 

[Larkinn]

Here are some more articles for the jackasses to ignore.

No, Larry, CRA Didn?t Cause the Sub-Prime Mess | New America Blogs

No, Larry, CRA Didn’t Cause the Sub-Prime Mess
Ellen Seidman -
April 15, 2008 - 9:55am

It has lately become fashionable for conservative pundits (Larry Kudlow, George Will) and disgruntled ex-bankers (Vernon Hill, for example, in his March 7 American Banker editorial) to blame the current credit crisis on the Community Reinvestment Act. This is patent nonsense. The sub-prime debacle has many causes, including greed, lack of and ineffective regulation, failures of risk assessment and management, and misplaced optimism. But CRA is not to blame.

First, the timing is all wrong. CRA was enacted in 1977, its companion disclosure statute, the Home Mortgage Disclosure Act (HMDA) in 1975. While many of us warned against bad subprime lending before the turn of the millennium, the massive breakdown of underwriting and extension of risky products far down the income scale-without bothering to even check on income-was primarily a post-2003 phenomenon. To blame a statute enacted in 1977 for something that happened 25 years later takes a fair amount of chutzpah.

It's even more outrageous because of the good CRA clearly did in between. The 1990s were the heyday of CRA enforcement-for a variety of reasons including the raft of mergers and acquisitions that followed the 1994 Riegle-Neal Interstate Banking and Branching Act, increased scrutiny of lending practices by the media and activism by housing advocacy groups and tougher enforcement by the Clinton Administration.That period saw increased home mortgage lending to lower income households and in lower income communities by the banks and thrifts covered by CRA, and a steady increase in the homeownership rate, especially for lower income and minority families. (See The Joint Center for Housing Studies). In addition, there was significant investment in affordable rental housing, community facilities and broader community economic development, directly by banks and thrifts earning investment credit under CRA or indirectly through bank investment in Community Development Financial Institutions and other community-based organizations.

New research by Ingrid Gould Ellen and Katherine O'Regan of NYUWagner, presented at a conference sponsored by the Philadelphia Federal Reserve Bank, convincingly demonstrates that property values went up dramatically in low and very low income urban census tracts during the 1990s, reversing severe declines during the prior two decades. While Ellen and O'Regan point out that this does not necessarily mean that everyone in those communities benefited, relating the improvement in home values in distressed communities to the effects of a statute designed to increase access to mortgage credit in those communities, during a period when the statute was vigorously enforced, is a reasonable connection.

Second, CRA does not either encourage or condone bad lending. Bank regulators were decrying bad subprime lending before the turn of the millennium (see Interagency Guidance on Subprime Lending), and warning the CRA-covered institutions we regulated that badly underwritten subprime products that ignored consumer protections were not acceptable. Lenders not subject to CRA did not receive similar warnings.And we also explained to those we regulated how to serve lower income communities and borrowers in a manner that was good for the borrower, good for the bank, and earned CRA credit.

For example, in October 2000, when I spoke to the National Association of Affordable Housing Lenders, a group of CRA-covered lenders, I said, "key to successful community reinvestment activity is being a responsible lender. Being responsible means making loans on responsible terms to people who can afford to pay them back, and making certain borrowers both understand the terms of the loan and have the opportunity to get the best terms available given their credit and financial position. But it also means expanding both the market for and affordability of loan products. It means working with customers to make them more bankable, helping families find the loan that is right for them, and investing in their success and yours by supporting organizations that assist you by counseling these individuals on the front and the back end of a loan."

CRA enforcement became a lower priority for bank regulators after 2001. My successor at the Office of Thrift Supervision, in fact, led an effort-eventually thwarted-to unilaterally loosen CRA regulations for institutions with more than $1 billion in assets. See 70 Fed. Reg. 10023. Nevertheless, CRA regulations were eased more generally in 2005. See 70 Fed. Reg. 44256.

The years that coincided with reduced CRA enforcement are also the years when CRA-covered entities wandered deeper into "higher priced loans," a category that includes, but is not limited to, "exploding ARMs" and other particularly pernicious kinds of loans. Thanks to the valiant efforts of late Fed Governor Ned Gramlich, starting in 2004 we have data about "higher priced loans." In that year, bank, thrifts and their subsidiaries-the entities covered by CRA-made about 37% of high cost loans. By 2006, the bank, thrift and subsidiary percentage was up to 40.9%. That a lack of interest in CRA enforcement coincided with CRA-covered entities getting into higher priced lending does not seem to me an argument for less CRA enforcement. Rather, it's an argument for better enforcement of a statute that, when well enforced, had proven its worth in helping both borrowers and communities.

Finally, it is nevertheless the case that CRA-covered lenders are not the source of the problem. One of CRA's major failings, in fact, is that it only applies to banks and thrifts. Remember all the investment banks who demanded product and then sliced and diced loans until it was impossible to understand their quality?They're not covered. Neither are the independent mortgage banks, the kinds of firms that have gone bankrupt or nearly so because of their abysmal lending practices, who regularly made about 50% of the high cost loans. Bank affiliates, another uncovered group, made about 12% of the high cost loans.

Janet Yellin, President and CEO of the Federal Reserve Bank of San Francisco recently made this point, saying "Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans, and studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households." And a recent study by Traiger & Hinckley LLP (See also the addendum).

CRA is not perfect. It doesn't cover a substantial portion of the financial services landscape. It has become complex, and the primary focus is on numbers of loans, with less attention to the quality of those loans. Asset-building depository and other services are given short shrift. And banks and thrifts have been allowed to "count" loans made by affiliates that are not subject to effective regulatory scrutiny. Governor Gramlich was right when he said that these entities-like the independent mortgage bankers-should be subject to far greater regulatory scrutiny, for many reasons. Certainly banks should not be allowed to count loans made by these affiliates for CRA purposes without such scrutiny.

But these are not reasons to repeal CRA or blame it for a mess caused primarily by those not subject to its reach during a period when even those under its umbrella were not encouraged to take it seriously. Rather, our challenge is to respond to the ongoing credit crisis in part by modernizing CRA, expanding its reach and making it even more effective than it was in the 1990s.

 

[Diuretic]

heh, it shouldn't surprise me, but for some reason it still does. Republicans don't even want to know what Wall Street did, they are bound and determined to blame their stupid mistakes on everyone but the actual culprits.

What a bunch of assholes.

Or consider the way the House Republicans torpedoed the bailout bill a few days ago. The real reason they did it was almost certainly to evade responsibility for an unpopular measure but the announced reason seemed designed to convince the nation's 7-year-olds -- because Nancy Pelosi said something mean.

Not just arseholes, whining crybabys too. "Nancy Pelosi told us off! Waaaaaaaaaaaaaaaaaaa!!!!! We're not gonna take that that you, you, you meanie Nancy! We're gonna hold our breath! We're gonna shout and yell! And we're going to crap our diapers because you yelled at us! We'll show you!"

 

[Larkinn]

And another...


Did Liberals Cause the Sub-Prime Crisis? | The American Prospect

Did Liberals Cause the Sub-Prime Crisis?

Conservatives blame the housing crisis on a 1977 law that helps-low income people get mortgages. It's a useful story for them, but it isn't true.


Robert Gordon | April 7, 2008 | web only



The idea started on the outer precincts of the right. Thomas DiLorenzo, an economist who calls Ron Paul "the Jefferson of our time," wrote in September that the housing crisis is "the direct result of thirty years of government policy that has forced banks to make bad loans to un-creditworthy borrowers." The policy DiLorenzo decries is the 1977 Community Reinvestment Act, which requires banks to lend throughout the communities they serve.

The Blame-CRA theme bounced around the right-wing Freerepublic.com. In January it figured in a Washington Times column. In February, a Cato Institute affiliate named Stan Liebowitz picked up the critique in a New York Post op-ed headlined "The Real Scandal: How the Feds Invented the Mortgage Mess." On The National Review's blog, The Corner, John Derbyshire channeled Liebowitz: "The folk losing their homes? are victims not of 'predatory lenders,' but of government-sponsored -- in fact government-mandated -- political correctness."

Last week, a more careful expression of the idea hit The Washington Post, in an article on former Sen. Phil Gramm's influence over John McCain. While two progressive economists were quoted criticizing Gramm's insistent opposition to government regulation, the Brookings Institution's Robert Litan offered an opposing perspective. Litan suggested that the 1990s enhancement of CRA, which was achieved over Gramm's fierce opposition, may have contributed to the current crisis. "If the CRA had not been so aggressively pushed," Litan said, "it is conceivable things would not be quite as bad. People have to be honest about that."

This is classic rhetoric of conservative reaction. (For fans of welfare policy, it is Charles Murray meets the mortgage mess.) Most analysts see the sub-prime crisis as a market failure. Believing the bubble would never pop, lenders approved risky adjustable-rate mortgages, often without considering whether borrowers could afford them; families took on those loans; investors bought them in securitized form; and, all the while, regulators sat on their hands.

The revisionists say the problem wasn't too little regulation; but too much, via CRA. The law was enacted in response to both intentional redlining and structural barriers to credit for low-income communities. CRA applies only to banks and thrifts that are federally insured; it's conceived as a quid pro quo for that privilege, among others. This means the law doesn't apply to independent mortgage companies (or payday lenders, check-cashers, etc.)

The law imposes on the covered depositories an affirmative duty to lend throughout the areas from which they take deposits, including poor neighborhoods. The law has teeth because regulators' ratings of banks' CRA performance become public and inform important decisions, notably merger approvals. Studies by the Federal Reserve and Harvard's Joint Center for Housing Studies, among others, have shown that CRA increased lending and homeownership in poor communities without undermining banks' profitability.

But CRA has always had critics, and they now suggest that the law went too far in encouraging banks to lend in struggling communities. Rhetoric aside, the argument turns on a simple question: In the current mortgage meltdown, did lenders approve bad loans to comply with CRA, or to make money?

The evidence strongly suggests the latter. First, consider timing. CRA was enacted in 1977. The sub-prime lending at the heart of the current crisis exploded a full quarter century later. In the mid-1990s, new CRA regulations and a wave of mergers led to a flurry of CRA activity, but, as noted by the New America Foundation's Ellen Seidman (and by Harvard's Joint Center), that activity "largely came to an end by 2001." In late 2004, the Bush administration announced plans to sharply weaken CRA regulations, pulling small and mid-sized banks out from under the law's toughest standards. Yet sub-prime lending continued, and even intensified -- at the very time when activity under CRA had slowed and the law had weakened.

Second, it is hard to blame CRA for the mortgage meltdown when CRA doesn't even apply to most of the loans that are behind it. As the University of Michigan's Michael Barr points out, half of sub-prime loans came from those mortgage companies beyond the reach of CRA. A further 25 to 30 percent came from bank subsidiaries and affiliates, which come under CRA to varying degrees but not as fully as banks themselves. (With affiliates, banks can choose whether to count the loans.) Perhaps one in four sub-prime loans were made by the institutions fully governed by CRA.

Most important, the lenders subject to CRA have engaged in less, not more, of the most dangerous lending. Janet Yellen, president of the San Francisco Federal Reserve, offers the killer statistic: Independent mortgage companies, which are not covered by CRA, made high-priced loans at more than twice the rate of the banks and thrifts. With this in mind, Yellen specifically rejects the "tendency to conflate the current problems in the sub-prime market with CRA-motivated lending.? CRA, Yellen says, "has increased the volume of responsible lending to low- and moderate-income households."

Yellen is hardly alone in concluding that the real problems came from the institutions beyond the reach of CRA. One of the only regulators who long ago saw the current crisis coming was the late Ned Gramlich, a former Fed governor. While Alan Greenspan was cheering the sub-prime boom, Gramlich warned of its risks and unsuccessfully pushed for greater supervision of bank affiliates. But Gramlich praised CRA, saying last year, "banks have made many low- and moderate-income mortgages to fulfill their CRA obligations, they have found default rates pleasantly low, and they generally charge low mortgages rates. Thirty years later, CRA has become very good business."

It's telling that, amid all the recent recriminations, even lenders have not fingered CRA. That's because CRA didn't bring about the reckless lending at the heart of the crisis. Just as sub-prime lending was exploding, CRA was losing force and relevance. And the worst offenders, the independent mortgage companies, were never subject to CRA -- or any federal regulator. Law didn't make them lend. The profit motive did.

And that is not political correctness. It is correctness.

 

[Care4all]

How about making a bad choice as a possibility ?

I'm certain that some did....

 

[Ravi]

Or consider the way the House Republicans torpedoed the bailout bill a few days ago. The real reason they did it was almost certainly to evade responsibility for an unpopular measure but the announced reason seemed designed to convince the nation's 7-year-olds -- because Nancy Pelosi said something mean.

Not just arseholes, whining crybabys too. "Nancy Pelosi told us off! Waaaaaaaaaaaaaaaaaaa!!!!! We're not gonna take that that you, you, you meanie Nancy! We're gonna hold our breath! We're gonna shout and yell! And we're going to crap our diapers because you yelled at us! We'll show you!"

I only hope that the Republican party reforms itself. I actually respect conservatives, but these people are beyond belief.

 

[Diuretic]

I only hope that the Republican party reforms itself. I actually respect conservatives, but these people are beyond belief.

Indeed they are. Blind partisanship fails everyone.

 

[WillowTree]

heh, it shouldn't surprise me, but for some reason it still does. Republicans don't even want to know what Wall Street did, they are bound and determined to blame their stupid mistakes on everyone but the actual culprits.

What a bunch of assholes.

hey dipshit, how many times to they have to tell you all are to blame before you comprehend it?? I think we are up to about 100 now yep that's what donkeys do best they bray on and on and on and on and on bush bush bush bush bush bush bush bush bush bush bush bush bush