Indeependent
Diamond Member
- Nov 19, 2013
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Fuck Rush: he was praising GE for not stopping it.Of course it had to do with risky lending.Rush? What the fuck are you taking about? Holy shit you are a pathetic fucking liberal bumper sticker.And you completely ignored everything I wrote.You are an ignorant ass.
New Study Finds CRA 'Clearly' Did Lead To Risky Lending | Investor's Business Daily
Democrats and the media insist the Community Reinvestment Act, the anti-redlining law beefed up by President Clinton, had nothing to do with the subprime mortgage crisis and recession.
But a new study by the respected National Bureau of Economic Research finds, "Yes, it did. We find that adherence to that act led to riskier lending by banks." Added NBER: "There is a clear pattern of increased defaults for loans made by these banks in quarters around the (CRA) exam. Moreover, the effects are larger for loans made within CRA tracts," or predominantly low-income and minority areas.
To satisfy CRA examiners, "flexible" lending by large banks rose an average 5% and those loans defaulted about 15% more often, the 43-page study found.
It passed a law requiring the government-backed agencies to "assist insured depository institutions to meet their obligations under the (CRA)." The goal was to help banks meet lending quotas by buying their CRA loans.
But they had to loosen underwriting standards to do it. And that's what they did. "We want your CRA loans because they help us meet our housing goals," Fannie Vice Chair Jamie Gorelick beseeched lenders gathered at a banking conference in 2000, just after HUD hiked the mortgage giant's affordable housing quotas to 50% and pressed it to buy more CRA-eligible loans to help meet those new targets. "We will buy them from your portfolios or package them into securities."
Read on.......
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Mac, you are a tool. Your little sheep are little tools.
What happened when a mortgage was written?
And why?
I don't know if Rush has covered that.
.
From 2001-2007, Fannie and Freddie bought roughly half of all CRA home loans, most carrying subprime features.
Lenders not subject to the CRA, such as subprime giant Countrywide Financial, still fell under its spell. Regulated by HUD, Countrywide and other lenders agreed to sign contracts with the government supporting such lending under threat of being brought under CRA rules.
"Countrywide can potentially help you meet your CRA goals by offering both whole loan and mortgage-backed securities that are eligible for CRA credit," the lender advertised to banks.
Housing analysts say the CRA is the central thread running through the subprime scandal — from banks and subprime lenders to Fannie and Freddie to even Wall Street firms that took most of the heat for the crisis.
While the 1977 law was passed 30 years before the crisis, it underwent a major overhaul just 10 years earlier. Starting in 1995, banks were measured on their use of innovative and flexible" lending standards, which included reduced down payments and credit requirements.
Banks that didn't meet Clinton's tough new numerical lending targets were denied merger plans, among other penalties. CRA shakedown groups like Acorn held hostage the merger plans of banks like Citibank and Washington Mutual until they pledged more loans to credit-poor minorities.
WaMu CEO Kerry Killinger has blamed the CRA for his bank's overexposure to risky loans. He said he wanted to tighten lending requirements, but "such measures would have presented other issues such as the company's CRA rating and its commitment to serving its (low-income and minority) customers and communities."
Other large banks have reported serious delinquency rates on CRA home loans. Bank of America's 2009 10-K states: "Our CRA portfolio comprised 6% of the total residential mortgage balances, but 17% of nonperforming residential mortgage loans."
Under Clinton's revised CRA, moreover, banks for the first time earned CRA credit for purchasing subprime securities.
A wave of these securitizations began in 1997, which also happens to mark the start of the housing bubble.
CRA “Clearly Did” Lead To Risky Loans
New study concludes that the Community Reinvestment Act 'clearly' did lead to risky lending - AEI
Read the bold faced Mac. Your commie networks are doing bad things to you. Stop watching cnn loser.
Keep thinking it had nothing to do with the housing crisis and risky lending Mac. You do this for a living? Not to mention the bi-partisan issue that also had nothing to with Bush in regards to the Commodity Futures Modernization Act, passed in Dec, 2000.
The mortgage companies knew they'd have that shit mortgage off their books, after fees, by noon the next day.
Those shit mortgages went into shit CMOs and even shittier CDOs.
Then AIG insured the whole mess with no reserve requirements and cleared the books.
Then those shit securities were given AAA ratings and sold to "clients" by "fiduciaries".
Then it all came down.
But you don't know that, because Rush doesn't cover it.
.
