’)The Republican party is just trying out the latest version of the Southern Strategy.
First of all, even if Fannie and Freddie were the most awful companies in the history of the planet, its books chock-a-block with non-performing loans, none of the financial contagion—none of it—would have happened had not greedy financial institutions invented the risky securities that used mortgages as their foundation, via procedures that created economic incentives to write non-performing loans. We explained that a long time ago, here. Second of all, as we explained yesterday, loans that fulfilled the anti-redlining Community Reinvestment Act, performed better than the average mortgage.
Third of all: the part that makes you sick to your stomach. The pattern being drawn across the right—the Big Lie so notorious it’s hard to belief they’d even dare it—is that this financial mess is something black people have done to white people.
The difference this time is that this blood libel is being debunked by liberals who aren’t spineless. Wall street made this mess with an assist from their conservative pals, and yet again Democrats are needed to clean up a Republican’s economic mess.
Oh please. I was wondering how we’d get around to lame-ass, pussy accusations of the “southern strategy” and now we have it. Rather than acknowledging however, that the Community Reinvestment Act played a major role along with other pressures brought about by Democrats in Congress and Bill Clinton to loosen restrictions on who could qualify for mortgages which were then bought by other firms and guaranteed by Freddie Mac and Fannie Mae, it’s so much easier to whip out the RACISM card.
Par for the course with the left.
If this were truly the fault of Wall Street and conservatives, Nancy Pelosi and Harry Reid along with their little band of merry left wing elves in Congress would have been screaming bloody murder, demanding hearings and independent investigations. There is documented evidence of the Bush administration and others in the GOP looking to get a handle on this burgeoning crisis for the last 5-6 years, and being blocked by Democrats at every turn who said that such changes would lessen the availability of “affordable” housing.
Yes, greed on Wall Street aided the problem with the experts there finding more and more slick ways to sell mortgages and finance housing and there was definitely some unscrupulous lenders that took advantage of people. Unfortunately, they were operating within a framework that was designed and implemented in large part by Democrats all in the name of getting people more “affordable housing.” This includes approving people for mortgages, many of which were minorities (this is a fact, not racism) who couldn’t afford them. This wasn’t just for small two bedroom homes but people getting approved for $500,000 mortgages with nothing but stated income.
But this is how the left operates. It’s easier just to cry racism than to acknowledge that they fucked up.
We wouldn’t have to point this out if the automatic reaction of the right was “the minorities did it” and if that wasn’t their automatic reaction about every problem we’ve got in America.
Kudlow, Cavuto, Bachmann. The whole stormfront bullpen is warming up
“…the Community Reinvestment Act played a major role along with other pressures brought about by Democrats in Congress and Bill Clinton to loosen restrictions on who could qualify for mortgages..”
Jay, the CRA was enacted in 1977 and in 30 years this is the first time anything like this has ever happened. So it really can’t be the fault of the CRA itself. So. Would you please give us links that support the claim that the Clinton administration and Democrats pressured and/or forced Fannie and Freddie to make unsafe loans?
What you need to back up that claim is specific language from a bill, rule change, executive order or some other official act of Congress or the President that actually, officially allowed the loosening of mortgage restrictions.
Can you provide any of this information?
“Oh please. I was wondering how we’d get around to lame-ass, pussy accusations of the ’southern strategy’ and now we have it.”
The Republican party has fanned the flames of hatred for decades in order to win elections. If you don’t like it when we point out that fact, then you can go fuck yourself.
Quit fucking whining when we call your party a bunch of racist assholes, because that’s exactly what they are.
“Rather than acknowledging however, that the Community Reinvestment Act played a major role along…”
We won’t acknowledge that, because it is a lie. Private banks started making loans that they knew were bad because they could just package those loans up and sell them to another bank, without disclosing the true level of risk. This is a direct result of deregulation Phil Gramm pushed through. This is 90% of the problem.
You know less about economics than John McCain does. I trust Paul Krugman’s opinion over your uninformed ass any day.
Jay, the CRA was enacted in 1977 and in 30 years this is the first time anything like this has ever happened. So it really can’t be the fault of the CRA itself.
And you’re just as ignorant as other people and that’s why you’d write something like this.
Read the following article and you’ll get a better understanding of the problem. Note that this article was written in 2000 and warned of the many problems we now face:
http://www.city-journal.org/html/10_1_the_trillion_dollar.html
The right seems to want to focus the blame on Clinton and multiculturalism and making affordable housing possible for minorities. That’s the racist strain of this argument and it’s racist because it’s a cause that’s emphasized even though it flies in the face of the facts:
In the article you linked to Jay, the author writes this:
Yeah, well, turns out lenders did find a way to market to minorities, tactics that actually give credence to many of the reasons the CRA was passed in the first place:
http://www.stephenbainbridge.com/index.php/punditry/they_make_you_embarrassed_to_be_a_conservative/
If you want to keep up this line of attack here, Jay, you’re going to have to come up with some actual statistics or facts to support your claims. But this claim of yours:
is a total distortion of the facts. Many of the sub-prime loans went to minorities, but MOST of them went to whites. Now, I didn’t see a single shred of evidence that the Clinton administration or democrats forced banks to give unsafe loans to people just because they were minorities. Maybe I missed it. Would you care to point that evidence out?
At the same time, I did see an author with an ideological ax to grind as in this passage:
So even if the lending practices he complains about were successful, he would still be opposed to it based purely on ideological grounds.
Similarly, his focus is almost entirely on CRA loans to minorities. No where does he mention that most sub-prime loans went to whites.
Bainbridge cites a study from 10 years ago, right around the time of the article you linked to, that found whites received the majority of sub-primes loans. So why, if that was true ten years ago, does the author of your article focus entirely on loans to minorities as the source of the problem?
“If you want to keep up this line of attack here, Jay, you’re going to have to come up with some actual statistics or facts to support your claims”
I figure there’s a 60% probability that Jay will run from this debate and pretend at a later date that it did not happen.
“Par for the course with the left.”
And it’s not par for the course of the right to immediately blame EVERYTHING on black people and Clinton.
“If this were truly the fault of Wall Street and conservatives, Nancy Pelosi and Harry Reid along with their little band of merry left wing elves in Congress would have been screaming bloody murder, demanding hearings and independent investigations.”
Man, if only there was some easily Googled proof that Nancy Pelosi had demanded hearings and independent investigations into the financial crisis. Like maybe some article called “Pelosi orders wide Wall Street probe” or something along those lines.
“Unfortunately, they were operating within a framework that was designed and implemented in large part by Democrats all in the name of getting people more “affordable housing.”
And since Jay wouldn’t want to be accused of racism by us race-card playing liberals, he’d certainly be able to back up such a non-racist statement, like blaming black people and Clinton instead of Republican deregulation, with some basic numbers illustrating the extent to which these minority-based loans played a “major” (by which Jay means “the only”) in this meltdown.
And so the Democrats, who couldn’t block war funding, couldn’t stop the S-CHIP veto, couldn’t stop Alito and Roberts being confirmed,and couldn’t get Gonzales to testify, COULD stop Republicans from looking into Fannie and Freddie giving away the store to the brown people?
Don’t make me laugh.
Jay, you are shameless. Absolutely shameless. How do you sleep at night? Pathetic.
is a total distortion of the facts. Many of the sub-prime loans went to minorities, but MOST of them went to whites.
So you rebut my argument by repeating exactly what I said except I didn’t use the word “whites” to describe people (which is a conclusion easily drawn for those with brains when I put the qualifier that ‘many’ were minorities. It only stands to reason that the others who received similar loans were white). Let’s go back to what I said so that we can dispense with all of the nonsense that I’m blaming it on black people:
This includes approving people for mortgages, many of which were minorities (this is a fact, not racism) who couldn’t afford them. This wasn’t just for small two bedroom homes but people getting approved for $500,000 mortgages with nothing but stated income.
So I say that “many” of the people who got sub-prime loans were minorities, but clearly make thew point that it was merely that MOST loans were made to PEOPLE that couldn’t afford them.
Now, I didn’t see a single shred of evidence that the Clinton administration or democrats forced banks to give unsafe loans to people just because they were minorities. Maybe I missed it. Would you care to point that evidence out?
Why point out evidence of a claim I never made? Of course, I will leave all of you now to twist yourselves into the proverbial pretzels claiming that’s EXACTLY what I was doing, even though what I wrote is pretty clear.
with some basic numbers illustrating the extent to which these minority-based loans played a “major”
See what I mean? I said nothing about “minority-based loans.” I merely said the CRA played a “major” role in this issue.
Oh and if you’re going to reference Bainbridge (who is a smart man), then you should read this as well:
http://www.stephenbainbridge.com/punditry/comments/should_we_blame_the_gop_or_the_democrats/
Jay,I will leave it to you to twist yourself into the proverbial pretzels claiming that when you wrote this:
“Oh please. I was wondering how we’d get around to lame-ass, pussy accusations of the ’southern strategy’ and now we have it.”
Were you weren’t completely ignoring the point of Oliver’s post to offer a defense of the your right wing brethren who are, indeed, making this all about race. They just can’t help themselves.
Bainbridge had the integrity to call bullshit on this particular strategy of the right.
You, my friend, obviously do not.
Crisis? What crisis?
By 2004, all of the elements of the current financial collapse had been in place for several years. The aggressive approach to enforcing the Community Reinvestment Act (CRA) started under Bill Clinton in 1998, and the seemingly endless appetite for paper by Fannie Mae and Freddie Mac had turned massive amounts of bad loans into mortgage-backed securities to spread their cancer throughout the system. In 2004, a year after the Bush administration tried to tighten regulation and oversight on Fannie and Freddie, Congress was told yet again that disaster loomed. The Democratic response is instructive to seeing who really sat back and allowed this collapse to occur.
Maxine Waters money quote: “Through nearly a dozen hearings, we were frankly trying to fix something that wasn’t broke. Mr. Chairman, we do not have a crisis at Freddie Mac, and particularly at Fannie Mae, under the outstanding leadership of Franklin Raines.” [Raines would barely avoid prosecution for fraud.]
Jay, here’s a study that shows the following:
* CRA loans constituted only 23% of all loans and 9.2% of high-cost loans.
* CRA loans were twice as likely to be retained in the originating bank’s portfolio than loans made by other institutions.
* CRA loans were less likely to be foreclosed upon than other loans.
If this were truly the fault of Wall Street and conservatives, Nancy Pelosi and Harry Reid along with their little band of merry left wing elves in Congress would have been screaming bloody murder, demanding hearings and independent investigations.
Translation: Pelosi & Reid aren’t behaving as dicated by my preconceived notations. Therefore, they’re plotting something evil.
Next time, Jay will blame the gays for the crisis, following suit of his ultra-con overlords.
Oh, Jay. Why do you hate America so much?
Were you weren’t completely ignoring the point of Oliver’s post to offer a defense of the your right wing brethren who are, indeed, making this all about race. They just can’t help themselves.
Actually, in this entry Oliver is linking to another entry wherein he has a video of Cavuto questioning Xavier Becerra and he says basically what I did, that the government pushed for “more minority lending and expanded lending to folks who couldn’t afford mortgages.” That’s true.
Bainbridge’s ire is directed at those who are blaming affirmative action and illegal immigration on the problem. That’s two totally different things and I agree with Bainbridge on that. But as the left is wont to do, they’re going to try and turn ANY criticism of the CRA and Democrats see/hear/speak no evil act regarding this crisis into something that is racist and that’s pretty lame.
Perlstein also tries the race card because the McCain camp had the audacity to run an ad with Franklin Raines in it who happens to be black! It didn’t have anything to do with the fact that Raines earned something like $90 million in salary and bonuses during his tenure at Fannie Mae when they were overstating earnings. No, they showed him because he’s black and that’s it.
To quote White Sox manager Ozzie Guillen, “Pfft. Please.”
I merely said the CRA played a “major” role in this issue.
As yet, you’ve neglected to explain that “major” role. Did CRA loans default at an extraordinary rate? Are CRA loans bringing down the value of all those mortgage-backed securities stuffing the vaults of failing banks?
You suggest that this is so with your “major” role assertion. You got the goods?
What if we remove race from the equation: is it or is it not true that the mortgage crisis was helped along by a lot of crap loans that the borrowers obviously couldn’t pay back?
Jay, what of Zython’s point that the CRA was slightly less than a quarter of the total loans, 10% of high cost ones and were less likely to meet with foreclosure? I’m curious to know your thoughts on that.
Jay, what of Zython’s point that the CRA was slightly less than a quarter of the total loans, 10% of high cost ones and were less likely to meet with foreclosure? I’m curious to know your thoughts on that.
Zython’s quotes from that study don’t really tell us anything. “More likely” and “less likely” still don’t explain away the billions of bad loans that were made.
In addition, other lenders, why not directly under the auspices of the CRA, used the new guidelines established with the changes made in 1995 (especially with respect to credit worthiness, LTV ratios and selling mortgage packages as securities) to loosen underwriting guidelines so that more of these mortgages could be approved. It was a Fannie Mae Foundation report that heaped praise upon one particular lender that worked with communities to establish “the most flexible underwriting criteria permitted.” That lender?
Countrywide.
We know what happened to them.
“But as the left is wont to do, they’re going to try and turn ANY criticism of the CRA and Democrats see/hear/speak no evil act regarding this crisis into something that is racist and that’s pretty lame.”
Jay, the right wing is suggesting that it was loans to minorities that caused the problem. One of the IBD editorials that has been widely circulated blamed the mortgage crisis on Clinton era “multiculturalism.” The first article you linked to above focussed entirely on the credit worthiness of black families. Malkin and others have taken up the meme. I just head Dennis Prager, a local right winger on the radio in Los Angeles, blame the crisis on lending to the “poor and minorities.”
It’s the right who have injected race and affirmative action into this round of the blame game. Since the stats show that the vast majority of sub-prime loans went to whites, why is race even mentioned at all?
If there’s no reason to bring race into the discussion what can be said about the motives of those that do?
“‘More likely’ and ‘less likely’ still don’t explain away the billions of bad loans that were made.”
Maybe you would like to answer some of Quaker’s questions about your sue of unfounded, unexplained modifiers:
Zython’s quotes from that study don’t really tell us anything. “More likely” and “less likely” still don’t explain away the billions of bad loans that were made.
It explains that the bad loans were by a large part non-CRA loans, both as raw numbers and as percentages in their respective categories. By that logic, if CRA loans had 1 bad loan, CRA loans would be a bad thing.
In general, it explains that you’re an idiot.
Well faf, Jay did answer that–sort of:
So you see? The CRA insisted that some banks stop redlining minority neighborhoods. Then something, something, mumble, mumble, mumble. And then a whole bunch of other lenders made some incredibly stupid loans because they knew they could grab their profit off the top and sell the remaining risk to someone else.
Thus, the CRA had a “major” role in creating this crisis.
Since the stats show that the vast majority of sub-prime loans went to whites, why is race even mentioned at all?
This is silly reasoning. Of course, the majority of such loans were going to whites. They make up the majority of Americans so it only stands to reason that they’re going to get the majority of such loans. You have to look at the proportion of the numbers however with regard to the percentage of them as the population and the percentage of subprime mortgages that they received.
I don’t understand why bringing up the aspect of that part of the discussion is so “hands off.” Do a Google search on “subprime mortgages minorities.” The bulk of the results are articles about how minorities have been the ones hardest hit by she subprime disaster. So if they’re the ones that were hardest hit, why is “racist” to point out that such loans were part of the overall problem?
And Quaker, if you want to keep covering your ears and yelling “LA! LA! LA! LA! LA!” so you can ignore what those changes that were made to the CRA in 1995 did to contribute to this mess, that’s fine with me. I’ll be over here on planet Earth.
And Quaker, if you want to keep covering your ears and yelling “LA! LA! LA! LA! LA!” so you can ignore what those changes that were made to the CRA in 1995 did to contribute to this mess, that’s fine with me.
Not covering my ears, Jay. Listening intently. You resolutely refuse to tell us how the CRA contributed. I keep asking. You keep not answering.
The story you linked from the City Paper, for example, explains why the CRA is irrelevant and out of date. It explains that the modern wonders of deregulation and securitization of mortgages make the CRA just another nanny state program designed to keep poor folks dependent on the government.
Your posts have been suggestive that Clinton tinkered with the CRA, then later, something bad happened, and therefore there must be a connection.
Simple question, Jay: How did the CRA play a part in the creation of the current crisis? Either you have an answer or you don’t.
Your posts have been suggestive that Clinton tinkered with the CRA,
He didn’t “tinker” with it. The change was major. It permitted securitization of such loans.
The change was major. It permitted securitization of such loans.
I see. So the “major” role wasn’t who got the loans. It’s what happened to the loans after that. Is that what you’re saying?
(Of course I realize that the answer to “Is that what you’re saying?” is always “No.” So I’ll spot you that–you can take it from there.)
In defence of jay, who seems to be the only one here interested in facts and not emotional character assaination aka liberals substitute for intelect. I suggest you read this n.y. times article written in 1999. As im sure you psuedo intelectual liberals will claim every other article is some rightwing conspiracy this is from your own liberal rag of a newspaper. read this and shut up becuase your all wrong and heres the proof
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=print
“So if they’re the ones that were hardest hit, why is ‘racist’ to point out that such loans were part of the overall problem?”
It’s suspect for a couple of reasons. First, as Bainbridge notes, (linked above):
It’s disingenuous to argue that the CRA forced banks to give loans to unqualified people based on their race without asking why minorities, with the same qualifications as whites, were more likely to be steered toward higher cost loans.
Second, I haven’t seen anyone cite any evidence that banks were forced banks to loan to minorities based solely on their race, regardless of their ability to pay. Can you cite any evidence that the CRA actually encouraged bad lending practices in order to boost minority home ownership? For more on that, see here:
http://www.newamerica.net/blog/asset-building/2008/no-larry-cra-didn-t-cause-sub-prime-mess-3210
In defence of jay, who seems to be the only one here interested in facts and not emotional character assaination
The guy who opened the thread calling people “pussies” is not interested in emotional character assassination?
The article glenn links doesn’t mention the CRA. And it doesn’t tell us anything about which loans are in default. Once again, our resident conservatives are quick to recite the latest narrative, but lack the stuff to back it up.
glenn: “In defence of jay, who seems to be the only one here interested in facts and not emotional character assaination aka liberals substitute for intelect.”
A.) He started out calling us pussies in a roundabout way, which makes you a moron.
b.) You insulted us in the same sentence you complained about us insulting Jay. That makes you a hypocrite as well.
“…why is ‘racist’ to point out that such loans were part of the overall problem?”
One of the fastest ways to tell if someone is racist is if they bring up race when it is not necessary. Race had no impact on these loans, none. So emphasizing race in order to attack them is racist.
Simple as that.
Jay,
you left a link to an article (http://www.city-journal.org/html/10_1_the_trillion_dollar.html) to support you assertions, however, in that article is the following, “when CRA was passed, banking was a highly regulated industry in which small, local savings banks, rather than commercial banks, provided most home mortgages. Regulation prohibited savings banks from branching across state lines and sometimes even limited branching within states,” Rather than support your claims about the CRA, this seems to support the fact that de-regulation caused the problem. In all actuality ALL of these things probably had a hand in the mess. The biggest fear I have for this country is that everything turns into what we have here, a shouting match over whether its the dems (libs) or reps (cons) fault. All the time while we fight over this, the pair of them, BOTH party elites are laughing all the way to their (probably solvent, probably swiss) banks. If we are to save our country we need to realize they are ALL liars and theives out to screw us and start to elect some true patriots, but where are they?????????
Sorry boys, but this entire financial crisis was created by the Democrats perversion of the CRA and other stupid decisions in forcing lending institution to make bad loans to people who could not afford them.
This increase in lending cause a draw on home and home building. Property values increased by 130% during this period. This forced the availability of funds into the market where people too adavnatage of the funds and never really thought they would have to pay it back or that the bubble would burst.
So in essence when you loan money to people who can not pay, it causes a strain on a financial system.
Hence the stupid socialist democrats caused this problem by trying to elevate POOR PEOPLE to normal people’s level artificially.
While race does play somewhat into it, there are white parasites also.
Get used to it.
“Sorry boys, but this entire financial crisis was created by the Democrats perversion of the CRA and other stupid decisions in forcing lending institution to make bad loans to people who could not afford them.”
That’s right, it was the government who forced banks to make bad loans. It wasn’t greedy banks making bad loans, which they could later sell to other banks without revealing the true risk. Nope, nope, nope. Not the greedy banks who had billions invested in such schemes, it was the average Joe with a $250,000 mortgage that caused the system to fail.
God damn it, you people are fucking stupid.
Gary,
Please post when you learn to spell or when you’re sober. Whichever comes first.
In defence of jay, who seems to be the only one here interested in facts and not emotional character assaination aka liberals substitute for intelect. I suggest you read this n.y. times article written in 1999…read this and shut up becuase your all wrong and heres the proof
Glenn, thanks for coming late to the debate with an article that was linked to multiple times by other idiots in other threads here as if you’d just discovered “THE SMOKING GUN” to silence all us fact free liberals. Of course, as a typical conservative you probably only read the blog post that highlighted what you wanted to hear and didn’t actually read the article yourself. Much like the blogger where you first found the link, who saw it on another conservative blog whose author hadn’t read the article either etc. etc. And so stupidity makes the rounds.
If you had actually read that article you would have read this:
So what you see here are three sources of pressure on Fannie Mae to increase its affordable housing loans, two of which most certainly aren’t liberals who want to give away homes to lazy black people.
What Jay and others would like to do is zero blame in on only the Clinton administration and minorities while ignoring the other powerful actors at work because they have an ideological agenda, much like yourself. Indeed, they want to place blame solely at the feet of Clinton and lazy black people, you know, people aren’t “normal” as GaryB so wonderfully put it.
Much closer to reality is Cole’s comment:
In all actuality ALL of these things probably had a hand in the mess.
Thanks for playing, Glenn. Keep grinding that ax.
I see the typical liberal grasp of economics, race, and reality is just a wee bit muddled. Let me be perfectly clear, it was not uncredit worthy minorities who are responsible for this mess. It is politicians pandering to uncredit worthy minorities that bear the responsibility. Pandering for votes and power in the most typical fashion.
To argue that the CRA has no bearing on this subject is either the height of intellectual dishonesty or ignorance. Take your pick.
To argue that the CRA has no bearing on this subject is either the height of intellectual dishonesty or ignorance. Take your pick.
Oh no, the CRA definitely has bearing on the subject. It’s just that, if you look at my earlier posts, the CRA probably helped DELAY the burst from happening.
That’s right, it was the government who forced banks to make bad loans. It wasn’t greedy banks making bad loans, which they could later sell to other banks without revealing the true risk. Nope, nope, nope. Not the greedy banks who had billions invested in such schemes, it was the average Joe with a $250,000 mortgage that caused the system to fail.
And who guaranteed those loans? Oh that’s right, it was two GOVERNMENT sponsored entities, Fannie Mae and Freddie Mac. Two organizations that didn’t operate under the same restrictions as banks (paid lower rates, 2.5% in capital reserves as opposed to 10% for banks). Of course, we now have enough evidence to show that people wanted them more strictly regulated, but it was Democrats who said, “Crisis? What crisis?” with regard to these entities.
Anybody watch the Youtube video of Democrats going off on Armando Falcon, the Fannie Mae regulator who was pushing for changes because he saw the problems that were on the horizon? The video is here and shows Democrats attempting to completely undermine the regulator. Here are some quotes as well:
Maxine Waters: Through nearly a dozen hearings, we were frankly trying to fix something that wasn’t broke. Mr. Chairman, we do not have a crisis at Freddie Mac, and particularly at Fannie Mae, under the outstanding leadership of Franklin Raines.
Gregory Meeks: … I’m just pissed off at OFHEO [the regulators trying to warn Congress of insolvency at the GSEs], because if it wasn’t for you, I don’t think we’d be here in the first place. … There’s been nothing that indicated that’s wrong with Fannie Mae, Freddie Mac has come up on its own … The question that then comes up is the competence that your agency has with reference to deciding and regulating these GSEs.
Lacy Clay: This hearing is about the political lynching of Franklin Raines.
Barney Frank: I don’t see anything in this report that raises safety and soundness problems.
http://www.youtube.com/watch?v=_MGT_cSi7Rs
And who guaranteed those loans? Oh that’s right, it was two GOVERNMENT sponsored entities, Fannie Mae and Freddie Mac. Two organizations that didn’t operate under the same restrictions as banks (paid lower rates, 2.5% in capital reserves as opposed to 10% for banks).
You’re drifting a bit there, Jay. Banks operate in the primary mortgage market. The GSEs operate in the secondary market. The GSEs guarantee “qualifying” loans so they can be sold to investors, freeing up capital for lenders to issue more loans.
Generally, you’re on point, though. Now we can return to the original question: How did loans issued under the CRA perform? Did they contribute more or less than other loans to the problems at Fannie Mae and Freddie Mac?
You got the goods or not?
Quaker, I’m not explaining myself on that again. I already have. If you choose not to read it or believe, that’s not my concern. Scroll up. You saying, “Well that’s not good enough” doesn’t concern me either.
Quaker, I’m not explaining myself on that again. I already have.
Actually you haven’t, Jay. My summary of your “explanation” stands:
You have yet to provide any sort of answer that explains how the CRA played “a major role” in the current crisis. You have yet to provide any sort of answer on how CRA loans have performed versus non-CRA loans.
Instead, you have pulled your standard dodge: avoid giving any answer, then pretend that your avoidance is an answer.
Bah! to you.
“And who guaranteed those loans? Oh that’s right, it was two GOVERNMENT sponsored entities, Fannie Mae and Freddie Mac.”
Jay, people tying to buy a home didn’t cause this crisis. To say otherwise shows you have no idea what caused this crisis.
This collapse was the latest Tulip Bulb story. People thought that flipping homes was an easy way to make a quick buck, and banks played along because they made their money setting up the loan and then selling it to another sucker. THIS IS THE KEY Before Phil Gramm came along, banks had to keep their mortgages, which gave them incentives to make sure the people they were lending to could pay it back. Now, because they could package and sell the mortgages, they could lend people more than they could pay back, and just sell the bad debts to others.
This drive up the prices, while greatly increasing the amount of debt, without increasing the amount of assets backing up that debt. When people realized, ‘Hey, it’s just a Tulip Bulb.’ the market started to correct.
On a side note, we saw this coming years ago, but the people who warned about the upcoming problems were attacked as leftist Bush haters.
When the prices started to correct, that house that was holding up three mortgages was suddenly worth less than the debt still owing.
On a side note, people on the right said this could never happen. They were wrong. As usual.
Here’s the problem with this debate…
I took economics in university, and you are regurgitating right-wing talking points. Yet you will never admit you don’t know what you are talking about. You will never learn. You will continue to make the same mistakes again, and again, and again.
If you didn’t vote, it would be funny.
Mostly good, CS, but you might want to brush up on this:
Before Phil Gramm came along, banks had to keep their mortgages,
It’s a quite a bit more complicated.
Jay, people tying to buy a home didn’t cause this crisis. To say otherwise shows you have no idea what caused this crisis.
I’m not blaming people trying to buy a home. You’re making that up if you’re accusing me of doing so.
People thought that flipping homes was an easy way to make a quick buck, and banks played along because they made their money setting up the loan and then selling it to another sucker. THIS IS THE KEY Before Phil Gramm came along, banks had to keep their mortgages, which gave them incentives to make sure the people they were lending to could pay it back. Now, because they could package and sell the mortgages, they could lend people more than they could pay back, and just sell the bad debts to others.
Dude, what the hell are you talking about? Banks had to keep their loans before Phil Gramm came along? Why do you think Fannie Mae and Freddie Mac were created? They were created specifically to buy mortgages on the secondary market, pool them and sell them as mortgage backed securities on the open market to investors. And the debts didn’t become ‘bad’ until people started to miss mortgage payments. The problem is, far too many of these loans came out of the sub-prime market, where more people are likely to default (whether they can’t afford to pay or whether or not it was somebody that bought a house they couldn’t flip).
Wow.
On a side note, we saw this coming years ago, but the people who warned about the upcoming problems were attacked as leftist Bush haters.
Bullshit. Your “we” acted as if nothing was wrong when regulators and the Bush administration were arguing that the house of cards was going to fall. Watch that video CS. Are you seriously going to pass off this notion that Democrats say this coming years ago when they’re sitting their lauding the work of Frank Raines and talking about wonderfully Freddie Mac and Fannie Mae were doing? Give me a break.
On a side note, people on the right said this could never happen. They were wrong. As usual.
Uh huh. The right has been saying for the last 5-6 years that changes needed to be made. It was Democrats who sat on their hands pretending everything was fine. Cripes, the video below shows Barney Frank in JULY saying that everything was ok (he’s about 1:15 in):
http://www.youtube.com/watch?v=w_-pxrZdSKQ
I took economics in university
You should ask for your money back.
“You have yet to provide any sort of answer that explains how the CRA played “a major role” in the current crisis.”
He can’t answer that question, because he doesn’t understand the current crisis. He can only repeat talking points given by other right-wingers, most of whom also don’t understand the current crisis.
Is that the right video, Jay? In the one you linked, Rep. Frank says something to the effect of: “If an entity is too big or too connected so that one failure starts a chain reaction, of course you have to step in.”
That doesn’t sound like “Everything is OK” to me.
Jay: “Watch that video CS.”
Did you watch that video, Jay? Paulson was the one that said they were fine, not Frank. You actually took the time to look up evidence to use against me, and the evidence you found did the opposite of what you said.
Jay, you don’t know what you are talking about. Your problems are so fundamental, I don’t even know where to begin to correct them.
Me: “I took economics in university”
Jay”: “You should ask for your money back.”
I predicted this would happen. You didn’t.
Therefore, I’m smarter than you, at least on this subject.
Mock me if you want, but that fact will always remain.
Quaker in a Basement: “That doesn’t sound like ‘Everything is OK’ to me.”
Paulson was the one who said everything was okay.
So is it the consensus of my liberal economic experts that the CRA did not force lending institutions to lower the credit standards for mortgage applicants?
Did you watch that video, Jay? Paulson was the one that said they were fine, not Frank. You actually took the time to look up evidence to use against me, and the evidence you found did the opposite of what you said.
The video from 2004 CS. 2004. When the Fannie Mae regulator was saying the whole thing was a clusterfuck waiting to happen. Frank and his cohorts on the committee basically told the guy he was crazy and just a political hack gunning for Raines.
I predicted this would happen. You didn’t.
Normally, I don’t do instant messaging shortcuts when writing comments but ROFLMAO!! I literally did burst out laughing when I read that. First of all, how do we know you predicted anything? Second of all, how do you know what I predicted or didn’t?
Poor Jay, he’s still stuck in the hills of Tennessee trying to find fat white boys that he can put up against a tree and say, “Squeal like a pig! Wheeeeeeee!”.
In 2004, the republicans had control of the house, the senate and the White House. It’s hard to imagine how stupid someone has to be to recognize that the democrats couldn’t really block anything that the good ole boys wanted. Face it, your boys sat on their thumbs and did absolutely nothing.
Have a nice day.
Gentleman,
Traiger & Hinckley has done an extensive analysis of CRA loaning practices and implications. Among their conclusions are:
1. CRA banks were less likely to make risky home purchase
loans.
2. The high cost APR loans originating from CRA banks
were appreciably lower than other banks
3. CRA banks were twice as likely to retain originated
loans in their portfolios.
See: http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf –
Peace
You guys continue asking Jay for where the CRA played a major role in the market failure and he (along with others) keeps saying that the CRA forced banks to approve loans to risky borrowers. And to say “how did the CRA force banks to do anything?” seems assinine because what was the bill for if not for that?
Look, this is a big crisis, and I’m not one to blame it completely on the CRA. Greed and stupidity certainly played a part, but it certainly seems as though the CRA paved the way for greed and stupidity, and that is why the CRA is a “major” part of the problem.
All of this is mere speculation without testing various contributing factors in a sound econometric model. So far as I know no one has yet to endeavor on such a massive task. However, I surmise that some of the likely culprits would include HUD requirements on Freddie and Fannie to purchase subprime loans, NINJA loans, the growth of Mortgage-backed securities, the FED’s artificially low interest rates, increased power and influence of community groups like ACORN and NACA, proliferation of subprime originators, the compromise Gramm-Leach-Biley Act of 1999, creation of credit default swaps and many other factors including the CRA and its many revisions through the years.
I suspect (and, yes, this is speculation) that the CRA got the ball rolling down the hill and picked up all the accretions mentioned above to create the massive financial problem we face today. This CRA stone picked up a lot of moss on it way down. I would guess that the CRA is responsible for about a third of the damage, but the whole problem would not have started without its passage in 1977.
jay,
the point you are missing is that this financial mortgage meltdown has also occured in europe. no, i do not mean the countries that bought these mortgage backed securities, but i am referring to the deregulation of banking in england, iceland, ireland,italy, germany. do you mean to tell me that all these countries had implemented the CRA. I doubt it.
In addition, my brother who makes 100,000 per year is losing his house because he paid 400,000 with an ARM that began with rate of 2.0% and when the loan came due it was readjusted to 5.25% which tripled his monthly payment. His 2 best friends make more than he does and are also losing their homes because of the adjustable rate mortgages given knowing that once the rate adjusted from an extremly low rate, the borrower would not be able to make those payments. All three of these guys who are losing their homes are not in the category of minorties nor are they low income. MY house was worth about 500,000 after 2 years of purchasing it and on my street we have over 6 forclosed homes. I live in an upscale neighborhood in sonoma county california and the people that bought these homes were making over 75,000 per year not including spousal income. These were very educated people with great careers but once again the interest rate adjusted after 5 years and the new rate was not bearable to the homeowners. So please don’t blame clinton since bush has been in power for 8 years and lets not forget that when bill clinton adjusted the CRA, repubs were in the majority and they voted for it to pass!!!! How long have republicans been in the majority? so blame it on the other party instead of yourselves. In the early 1990’s sweden also had an enormous financial meltdown and it was cause by deregulation of the banks. Read all the newspapers that you want and this is the cause that is given. Look at all the tainted food and toys from china, why? not regulated, how about planes almost colliding in the sky or at takeoff, why? deregualtion of air traffic control I c an go on and on about how your stupid free maket ideology is a joke. In fact Senator Shelby of Alabama and Senator Bunning of Kentucky(both republicans) during Banking committee hearings also stated that this was cause by deregulation of banks. Watch CSPAN to confirm this. If the bush administration was serious about regulation then why are all the contractors in iraq stealing, embezzling, money from taxpayers. that is not my opinion, that is a report from the inspector general of iraq stewart bowen. Bush and cronies are corrupt and i do not care for clinton policies either. Repubs and dem’s have passed free trade policies which have caused the collapse of economies in michigan, illinios, ohio and many other manufactoring states. repubs passed a bill to give tax breaks to corp. that ship jobs overseas, so we americans can buy shit from china and make them rich while our trade deficit runs an enormous debt. So please do not go there because i can give you many more facts!!!!!!
The only one that has this right is the “CRA stone gathering moss” analogy. The CRA made loans and banks more political and opened the door for action groups to pressure local banks. Yes there was a problem with “redlining” but they should have stopped there. Add to that the potential for quick profits and our tendency as a society to think we should all live like people on Dynasty or MTV cribs and the stage was set.
The CRA started this the same way every journey begins with the first step. Bottomline-There is enough blame to go around and we need to hold our elected representative accountable–Call them, write them, go see them.
Maybe its time for term limits