Why Wall St. Is Deserting Obama

[8537]

the Community Reinvestment Act was passed in 1977.
Yes, it was passed then but also revised and passed again in 1995.

That's quite simply false. Why don't you link to the bill Republicans passed in 1995.

By the way, since when was it bad policy to give loans to minorities?
Since when they didn't financially qualify to pay back the loan

That's not what your source said. It said loans to minorities, with no comment on credit rating. Unless, of course, you believe that minorities are naturally less credit worthy.

And how did the CRA cause a massive run-up in subprime loan origination at non-depository institutions?
I suppose after looking at the lucrative returns they could get...many pension fund and insurance company investment managers got greedy and joined in the feeding frenzy

"joined the feeding frenzy" by offering loans they know could not be repaid? hmm...must be a securitization problem. Perhaps someone should have reformed that problem instead of halving the capital requirements.
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[Toro]

The CRA was not the cause of the Financial Crisis.

http://www.usmessageboard.com/economy/70006-cra-not-to-blame-for-housing-debacle.html

Anyone wishing to post causal or empirical evidence demonstrating that it was, I'd love to see it. But otherwise, the only stuff I've seen is from politically motivated people and sites posting timelines, and timelines do not demonstrate causality.

 

[Oddball]

Timelines seem to determine causality just fine, when you're trying to prove some nebulous theory like "excess capacity".

 

[Toro]

Timelines seem to determine causality just fine, when you're trying to prove some nebulous theory like "excess capacity".

Yeah, I'm sure that someone who clings to a theory that hasn't had any advances since 1922 probably would think excess capacity is a "theory" and a timeline is causality.

 

[Oddball]

The laws of atmospheric physics haven had too many changes in the last hundred years or so, either...So what?

At least Al Roker is smart enough to recognize that he can't turn a drought into a deluge, because he understands how cumulus clouds are formed.

 

[8537]

Timelines seem to determine causality just fine, when you're trying to prove some nebulous theory like "excess capacity".

Excess capacity can be measured very easily without resorting to timelines and causality.

 

[Mr. Peepers]

The day Waxman goes after Barney Frankenstein is the day i'll believe Dems are really concerned about protecting the American public...

And who do you think lobbied the Bush administration for laxer than lax lending requirements? Who BEGGED for them? Why, it was Wall Street and the mortgage lenders, of course! They were making a killing... and gambling with our 401K's.

 

[Toro]

The laws of atmospheric physics haven had too many changes in the last hundred years or so, either...So what?

At least Al Roker is smart enough to recognize that he can't turn a drought into a deluge, because he understands how cumulus clouds are formed.

Thanks for that, Dude. That's pretty funny, comparing philosophers to physicists. But I almost spit my drink all over my monitor. I'm sure you'll make a lot of friends in the Arts Department, though.

Like I always said, Austrians and Marxists are different sides of the same coin.

 

[Toro]

Timelines seem to determine causality just fine, when you're trying to prove some nebulous theory like "excess capacity".

Excess capacity can be measured very easily without resorting to timelines and causality.

Concepts such as "excess capacity" are merely statist bullshit purposefully designed by authoritarians to impose tyranny on those who love freedom and liberty.

 

[ScreamingEagle]

The day Waxman goes after Barney Frankenstein is the day i'll believe Dems are really concerned about protecting the American public...

And who do you think lobbied the Bush administration for laxer than lax lending requirements? Who BEGGED for them? Why, it was Wall Street and the mortgage lenders, of course! They were making a killing... and gambling with our 401K's.

This old Globe article pretty much sums it up...

...mortgage lenders didn't wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers. It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so - or else.

The roots of this crisis go back to the Carter administration. That was when government officials, egged on by left-wing activists, began accusing mortgage lenders of racism and "redlining" because urban blacks were being denied mortgages at a higher rate than suburban whites.

The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to "meet the credit needs" of "low-income, minority, and distressed neighborhoods." Lenders responded by loosening their underwriting standards and making increasingly shoddy loans. The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this "subprime" lending by authorizing ever more "flexible" criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.

All this was justified as a means of increasing homeownership among minorities and the poor. Affirmative-action policies trumped sound business practices. A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense. "Lack of credit history should not be seen as a negative factor," the Fed's guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as "valid income sources" to qualify for a mortgage. Failure to comply could mean a lawsuit.

As long as housing prices kept rising, the illusion that all this was good public policy could be sustained. But it didn't take a financial whiz to recognize that a day of reckoning would come. "What does it mean when Boston banks start making many more loans to minorities?" I asked in this space in 1995. "Most likely, that they are knowingly approving risky loans in order to get the feds and the activists off their backs . . . When the coming wave of foreclosures rolls through the inner city, which of today's self-congratulating bankers, politicians, and regulators plans to take the credit?"...

Time and time again, Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that "these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis." When the White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing.

Now that the bubble has burst and the "systemic risk" is apparent to all, Frank blithely declares: "The private sector got us into this mess." Well, give the congressman points for gall. Wall Street and private lenders have plenty to answer for, but it was Washington and the political class that derailed this train. If Frank is looking for a culprit to blame, he can find one suspect in the nearest mirror.

Frank's fingerprints are all over the financial fiasco - The Boston Globe

 

[8537]

Like I always said, Austrians and Marxists are different sides of the same coin.

Interesting observation. They certainly share the same sense of ideological purity.

 

[8537]

Timelines seem to determine causality just fine, when you're trying to prove some nebulous theory like "excess capacity".

Excess capacity can be measured very easily without resorting to timelines and causality.

Concepts such as "excess capacity" are merely statist bullshit purposefully designed by authoritarians to impose tyranny on those who love freedom and liberty.

Excess capacity is the devil's workbench. It's the Bourgeoisie exploiting the proletariat by paying the laborer less than his or her contribution to value.

 

[8537]

The day Waxman goes after Barney Frankenstein is the day i'll believe Dems are really concerned about protecting the American public...

And who do you think lobbied the Bush administration for laxer than lax lending requirements? Who BEGGED for them? Why, it was Wall Street and the mortgage lenders, of course! They were making a killing... and gambling with our 401K's.

This old Globe article pretty much sums it up...

...mortgage lenders didn't wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers. It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so - or else.

The roots of this crisis go back to the Carter administration. That was when government officials, egged on by left-wing activists, began accusing mortgage lenders of racism and "redlining" because urban blacks were being denied mortgages at a higher rate than suburban whites.

The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to "meet the credit needs" of "low-income, minority, and distressed neighborhoods." Lenders responded by loosening their underwriting standards and making increasingly shoddy loans. The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this "subprime" lending by authorizing ever more "flexible" criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.

All this was justified as a means of increasing homeownership among minorities and the poor. Affirmative-action policies trumped sound business practices. A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense. "Lack of credit history should not be seen as a negative factor," the Fed's guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as "valid income sources" to qualify for a mortgage. Failure to comply could mean a lawsuit.

As long as housing prices kept rising, the illusion that all this was good public policy could be sustained. But it didn't take a financial whiz to recognize that a day of reckoning would come. "What does it mean when Boston banks start making many more loans to minorities?" I asked in this space in 1995. "Most likely, that they are knowingly approving risky loans in order to get the feds and the activists off their backs . . . When the coming wave of foreclosures rolls through the inner city, which of today's self-congratulating bankers, politicians, and regulators plans to take the credit?"...

Time and time again, Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that "these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis." When the White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing.

Now that the bubble has burst and the "systemic risk" is apparent to all, Frank blithely declares: "The private sector got us into this mess." Well, give the congressman points for gall. Wall Street and private lenders have plenty to answer for, but it was Washington and the political class that derailed this train. If Frank is looking for a culprit to blame, he can find one suspect in the nearest mirror.

Frank's fingerprints are all over the financial fiasco - The Boston Globe

Good to see that Jeff Jacoby believes that minority = bad credit.

Now, perhaps you or the editorialist can explain how non-CRA institutions offered 80% or more of the worst sub-primes...and why the private sector was so eager to securitize these loans if they knew the government was somehow foisting them upon banks.

Why would AIG buy an MBS consisting of loans it knew the government forced upon an originator?

 

[Toro]

Excess capacity can be measured very easily without resorting to timelines and causality.

Concepts such as "excess capacity" are merely statist bullshit purposefully designed by authoritarians to impose tyranny on those who love freedom and liberty.

Excess capacity is the devil's workbench. It's the Bourgeoisie exploiting the proletariat by paying the laborer less than his or her contribution to value.

Clearly, because you believe in communism such as "excess capacity," you hate America.

 

[MaggieMae]

Can our country afford to have investments in America disappear due to Obama's policies?

Of course! Wall Street should be shut down as an illegal gambling machine, and make corporations borrow from banks where their business practices are put in the spot light, and decisions on loaning them money is weighed by financial experts, and where workers wages & benefits are not gutted, and headed to the next lazy slouch laying in the Bahama sun.

Yup. I'm breathing fire today having read this report, posted here a few hours ago.

http://www.usmessageboard.com/economy/131165-greed.html

 

[loosecannon]

The raping of Chrysler Senior Secured Creditors, the extortion of BP, the takeover of the US auto industry, the takeover of US HealthCare were all just blips, but the Goldman suit! Wow! That's serious!

that's funny!

 

[ScreamingEagle]

And who do you think lobbied the Bush administration for laxer than lax lending requirements? Who BEGGED for them? Why, it was Wall Street and the mortgage lenders, of course! They were making a killing... and gambling with our 401K's.

This old Globe article pretty much sums it up...

...mortgage lenders didn't wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers. It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so - or else.

The roots of this crisis go back to the Carter administration. That was when government officials, egged on by left-wing activists, began accusing mortgage lenders of racism and "redlining" because urban blacks were being denied mortgages at a higher rate than suburban whites.

The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to "meet the credit needs" of "low-income, minority, and distressed neighborhoods." Lenders responded by loosening their underwriting standards and making increasingly shoddy loans. The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this "subprime" lending by authorizing ever more "flexible" criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.

All this was justified as a means of increasing homeownership among minorities and the poor. Affirmative-action policies trumped sound business practices. A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense. "Lack of credit history should not be seen as a negative factor," the Fed's guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as "valid income sources" to qualify for a mortgage. Failure to comply could mean a lawsuit.

As long as housing prices kept rising, the illusion that all this was good public policy could be sustained. But it didn't take a financial whiz to recognize that a day of reckoning would come. "What does it mean when Boston banks start making many more loans to minorities?" I asked in this space in 1995. "Most likely, that they are knowingly approving risky loans in order to get the feds and the activists off their backs . . . When the coming wave of foreclosures rolls through the inner city, which of today's self-congratulating bankers, politicians, and regulators plans to take the credit?"...

Time and time again, Frank insisted that Fannie Mae and Freddie Mac were in good shape. Five years ago, for example, when the Bush administration proposed much tighter regulation of the two companies, Frank was adamant that "these two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis." When the White House warned of "systemic risk for our financial system" unless the mortgage giants were curbed, Frank complained that the administration was more concerned about financial safety than about housing.

Now that the bubble has burst and the "systemic risk" is apparent to all, Frank blithely declares: "The private sector got us into this mess." Well, give the congressman points for gall. Wall Street and private lenders have plenty to answer for, but it was Washington and the political class that derailed this train. If Frank is looking for a culprit to blame, he can find one suspect in the nearest mirror.

Frank's fingerprints are all over the financial fiasco - The Boston Globe

Good to see that Jeff Jacoby believes that minority = bad credit.

Now, perhaps you or the editorialist can explain how non-CRA institutions offered 80% or more of the worst sub-primes...and why the private sector was so eager to securitize these loans if they knew the government was somehow foisting them upon banks.

Why would AIG buy an MBS consisting of loans it knew the government forced upon an originator?

Like i said ....greed i guess....not much downside if the loans were going to be backed up by Frank's Fannie...

 

[MaggieMae]

Quote:
And how did the CRA cause a massive run-up in subprime loan origination at non-depository institutions?
I suppose after looking at the lucrative returns they could get...many pension fund and insurance company investment managers got greedy and joined in the feeding frenzy


"joined the feeding frenzy" by offering loans they know could not be repaid? hmm...must be a securitization problem. Perhaps someone should have reformed that problem instead of halving the capital requirements.

The frenzy was fed by every Tom, Dick & Harry opening storefront mortgage companies and issuing loans by promising unsuspecting people that it wouldn't matter if a home was too expensive to maintain because they would be able to immediately turn around and refinance it on better terms. In the meantime, those people had NO down payment requirement and in many cases MINIMUM income that would ordinarily have disqualified them immediately. These were NOT the same low-income people who were buying homes under the CRA rules, which basically laid out regulatory processes for non-discrimination based on location. They still had to have down payments and the income-to-loan formula had to be met in order to qualify for a mortgage.

I don't think any pension fund investor had any clue when they bought into mortgage securities packages that they included all these bad loans. No one, it seems, even the so-called experts at SEC, realized the convoluted manipulations that were going on.

 

[loosecannon]

The raping of Chrysler Senior Secured Creditors, the extortion of BP, the takeover of the US auto industry, the takeover of US HealthCare were all just blips, but the Goldman suit! Wow! That's serious!

i might add that imo the strong arming of BP and an end around the civil courts to settle claims for amounts that were totally off the hook definitely put a scare into a LOT of industries who might otherwise invest in the US.

If you risk $20 or more Billion dollars to do something as difficult as drill an oil well on the bottom of the ocean all for an expected return of a few million $ the costs of doing business are simply too high.

And that happened just 3 weeks after Obama placed his stamp on expanding offshore drilling. Sending the message that any day the US could reverse policies completely changing your risk exposures by several magnitudes, regardless of the law....

Yeah Obama has chilled a lot of people who might have been fairly committed to doing business in the USA.

Only complete elimination of corporate taxes could overcome the damage Obama has done.

 

[MaggieMae]

They can't be his good buds and "Evil Corporations" at the same time. Too many mixed signals coming from this President. He's trying to please his deranged Leftist base while also bailing out Corporations. He's confusing everyone.

Private businesses, big corporations, keep even deranged extremists righties employed. Duh...