The financial crisis, in a nutshell

posted at 11:38 am on March 17, 2009 by Ed Morrissey

James Pethokoukis provides us a crystal-clear example of the reason for the economic crisis — and how our political leaders still haven’t learned from it.  He notes one small bank that has managed to weather the storm by lending carefully and within its means.  Boston Bizjournal reports that East Bridgewater Savings has gotten federal attention for its fiscal responsibility, but not in the way you’d think:

Bad or delinquent loans? Zero. Foreclosures? None. Money set aside in 2008 for anticipated loan losses? Nothing. …  The bank even squeaked out a profit of $87,000. And its Tier 1 risk-based capital ratio was 31.6 percent, or more than three times higher than many community banks in Massachusetts. “We’re paranoid about credit quality,” [Joseph] Petrucelli said. The 62-year-old chief executive has run the bank since 1992.

That makes Petrucelli a man to emulate, right?  After all, with all the outrage over AIG’s performance, shouldn’t we cheer someone who knows how to correctly assess risk and keep his lending institution in the black?  Only if you don’t work for the federal government (emphasis mine):

The FDIC’s negative review of East Bridgewater Savings Bank’s loan volume is an anomaly in today’s current banking scene as lenders reel from their role in offering too many cruddy mortgage products to borrowers with weak credit.

Still, the FDIC slapped East Bridgewater Savings with a rare “needs to improve” rating after evaluating the bank under the Community Reinvestment Act.

Let’s get this straight.  We bail out the people who made all sorts of bad loans, and we punish the people who didn’t?  How’s that for accountability?

In all seriousness, the FDIC gave EBS a poor rating because it didn’t advertise its rates well enough.  It doesn’t have a website, which is apparently a sin for FDIC-insured lenders.  The FDIC said that EBS didn’t have any “financial or legal impediments” to widening its lending, a remarkable statement considering the taxpayer monies getting thrown at companies that did widen their lending practices and wound up broke as a result.

Pethokoukis uses this example to remind us how the CRA distorted lending markets and led to the housing bubble that devastated the economy:

How many East Bridgewaters are out there that knuckled under to the pressure and started handing out mortgages to whomever? I am not saying that CRA is the only factor here. There is plenty of blame to go around, regulators, Alan Greenspan, derivatives desks on Wall Street.  But to let CRA and its enablers off the hook is ridiculous.

How many, indeed?  We are going through all of this bailout nonsense and economic upheaval, and the federal government is busily setting us up for the next crash.


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I am not saying that CRA is the only factor here. There is plenty of blame to go around

No, not the only factor, just the primary one.

Vashta.Nerada on March 17, 2009 at 11:40 AM

Democrats encourage bad behavior.

Then mitigate the consequences by creating social programs to blunt the effects of that bad behavior.

So it helps them in 2 ways; makes people need them and it makes people depend on them.

It’s quite ingenious really.

lorien1973 on March 17, 2009 at 11:41 AM

Not suprised at all. Bunch of power blind dorks in DC.

loudmouth883 on March 17, 2009 at 11:41 AM

rating after evaluating the bank under the Community Reinvestment Act. Bawrney Fawank and Chuck the Schm*ck Schummer Losers Club

.

FIFY

Branch Rickey on March 17, 2009 at 11:42 AM

East Bridgewater Savings is strong because they’re not “too big to fail.”

In other words, the bank is working because the Feds just haven’t f**ked with them yet.

UltimateBob on March 17, 2009 at 11:43 AM

No need to learn from past mistakes if nobody ever finds out about your past mistakes.

myrenovations on March 17, 2009 at 11:44 AM

Democrats encourage bad behavior.

Then mitigate the consequences by creating social programs to blunt the effects of that bad behavior.

So it helps them in 2 ways; makes people need them and it makes people depend on them.

It’s quite ingenious really.

lorien1973 on March 17, 2009 at 11:41 AM

Couldn’t have said it better myself.

midwesternperspective on March 17, 2009 at 11:44 AM

And CRA is still law, awesome. You can bet when republicans regain a majority they will not repeal it because they are to scared of being called Raaaaaciiissst.

Mord on March 17, 2009 at 11:45 AM

Suddenly, have very little to lose is a good place to be.

AubieJon on March 17, 2009 at 11:45 AM

Are you certain about this Ed? Getalife says this is a Bush Depression.

carbon_footprint on March 17, 2009 at 11:45 AM

But to let CRA and its enablers off the hook is ridiculous criminal.

whitetop on March 17, 2009 at 11:46 AM

I think my head is going to explode!

gwelf on March 17, 2009 at 11:46 AM

You can bet when republicans regain a majority…

Mord on March 17, 2009 at 11:45 AM

Are you selling that optimism in a bottle? I need some.

myrenovations on March 17, 2009 at 11:46 AM

I think my head is going to explode!

gwelf on March 17, 2009 at 11:46 AM

*

ditto

marklmail on March 17, 2009 at 11:49 AM

“We’re paranoid about credit quality,” [Joseph] Petrucelli said. The 62-year-old chief executive has run the bank since 1992.

This sounds vaguely racist to me. When are the pickets going to start? A successful enterprise like this can’t be tolerated. This will set a bad example for our young people. If the bar is set too high not everyone will be able to compete. Of course when the bar is set too low, no one succeeds.

Tommy_G on March 17, 2009 at 11:50 AM

QUIT SCREWIN AROUND AND JUST CALL IT WHAT IT IS.
REPARATIONS! AND WHITEY WILL PAY! OH YES…HE WILL PAY

lm10001 on March 17, 2009 at 11:50 AM

You’re on a roll Ed. These are all topics that need to be discussed every day so that we don’t take our eye off the ball here. Somethings coming down the shoot that we are not aware of. More to this crisis than economic problems.

I can’t help but to think back to the days following the Democrat takeover of power in 2006. Bush actually said something to the effect of “well, maybe now that Democrats have retaken over both houses, we can finally get some things accomplished.” That shocked me then, and it still rings loudly in my ears today. What’s really going on here? What’s really up with this “one world government” thing.

Keemo on March 17, 2009 at 11:50 AM

Still, the FDIC slapped East Bridgewater Savings with a rare “needs to improve” rating after evaluating the bank under the Community Reinvestment Act.

*head to desk*
*head to desk*
*head to desk*

Count to 10 on March 17, 2009 at 11:51 AM

I am not saying that CRA is the only factor here. There is plenty of blame to go around.

The crisis was caused by our own greed and desire to live above our means, but it was ENABLED by the Democrats and their do-gooder policies such as the CRA. Once you loosen the rules for one group, they are loosened for all. Once people start buying houses, the folks they bought them from start to move up, and the cycle repeats.

“A granite countertop in every kitchen, and a Williams-Sonoma pot on every stainless steel stovetop!”

Woody on March 17, 2009 at 11:51 AM

Suddenly, have very little to lose is a good place to be.

AubieJon on March 17, 2009 at 11:45 AM

That’s what the liberals love the most, everybody having nothing.

kirkill on March 17, 2009 at 11:51 AM

It’s going to take a Patriquin-style stick figure display to explain this mess to the idiots on the other side.

Kid from Brooklyn on March 17, 2009 at 11:52 AM

The overwhelming fiscal ignorance and stupidity of the Democratic Party and it’s pols is so great, so monumental, that even the adjectives I just used don’t begin to express the truth of it. Going to get my old Roget’s out of the closet and see if I can find some words that adequately describe this. What are the odds?

jeanie on March 17, 2009 at 11:52 AM

This is absolute insanity. But people need to understand the CRA, while awful, is a symptom of our problems, it’s not the real cause. The problems we have come from the abuse of debt. We’ve built an economy dependent on continued borrowing and spending, by governments, businesses, and individuals. That kind of economy is doomed from the beginning because it encourages all of us to become spendthrifts. And spendthrifts are destined for serious problems eventually.

flyfisher on March 17, 2009 at 11:53 AM

American Achievement and Responsibility are hereby outlawed under the benevolent watch of the new Administration. There is no need for you to succeed as everything we feel you need and deserve will be given to you. You will be taken care of from cradle to grave (except if you are a Veteran).

/sarc

kingsjester on March 17, 2009 at 11:54 AM

I like this explanation better:

The financial crisis explained ……… …

Doris is the proprietor of a bar in Portsmouth. In order to increase sales, she decides to allow her loyal customers – most of whom are unemployed ex-sailors – to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around and as a result increasing numbers of customers flood into Doris’s bar.

Taking advantage of her customer’s freedom from immediate payment constraints, Doris increases her prices for rum and beer, the most-consumed beverages. Her sales volume increases massively.

A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Doris’s borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral.

At the bank’s corporate headquarters, expert bankers transform these customer assets into BEERCHITS, ALKYBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these names mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items.

One day, although the prices are still climbing, a risk manager (subsequently of course fired due his negativity) of the bank decides that the time has come to demand payment of the debts incurred by the drinkers at Doris’s bar.

However they cannot pay back the debts.

Doris cannot fulfil her loan obligations and claims bankruptcy.
BEERCHITS and ALKYBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 80%.

The suppliers of Doris’s bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation. Her rum supplier claims bankruptcy, her beer supplier is taken over by a competitor.

The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties.

The funds required for this purpose are obtained by a tax levied on the non-drinkers

thirteen28 on March 17, 2009 at 11:55 AM

Wasn’t President Hopealong encouraging banks to make riskier loans just the other day?

mchristian on March 17, 2009 at 11:55 AM

Picket signs! Hell yes!

“Best Damned Bank Ever!” “My Money’s Safe Here!”

“Honesty, Civility, Integrity! Right Here!”

If I lived anywhere near there, I’d go open an account today.

Oink on March 17, 2009 at 11:56 AM

In all seriousness, the FDIC gave EBS a poor rating because it didn’t advertise its rates well enough. It doesn’t have a website, which is apparently a sin for FDIC-insured lenders. The FDIC said that EBS didn’t have any “financial or legal impediments” to widening its lending, a remarkable statement considering the taxpayer monies getting thrown at companies that did widen their lending practices and wound up broke as a result.

Heh. The ACORN thugs couldn’t find this bank and shake ‘em down, because they didn’t have a website. It looks like going under the radar is the way to stay in business in this Through the Looking Glass administration.

chunderroad on March 17, 2009 at 11:57 AM

We’re from the government, we’re here to help.

GarandFan on March 17, 2009 at 11:57 AM

You’re on a roll Ed. These are all topics that need to be discussed every day so that we don’t take our eye off the ball here. Somethings coming down the shoot that we are not aware of. More to this crisis than economic problems.

Keemo on March 17, 2009 at 11:50 AM

Excellent Keemo. Thanks for helping me re-focus. I gave my “insights” {BR laughs at self} on the ridiculous (Meggie ‘Big Bottom’ McCain) the other day, and now am sticking to the priorities.

BR needed that swift kick of your analysis and thanks your for post!

Branch Rickey on March 17, 2009 at 11:57 AM

George Bernard Shaw:
We learn from history that we learn nothing from history.

Romeo13 on March 17, 2009 at 11:57 AM

Awesome. Every Republican that can get in front of a camera or a microphone should be quoting this story.

The same is true of local banks around here and probably across the country. The ones that made responsible loans and continued to hold those mortgages are in good shape in areas that never had an unsustainable housing bubble.

See county by county maps of the the last election, and generally the areas that are red will have local banks that are in good shape.

forest on March 17, 2009 at 11:58 AM

thirteen28 on March 17, 2009 at 11:55 AM

I might be tempted to laugh if it weren’t so true.

jeanie on March 17, 2009 at 11:58 AM

Keemo -

“…and thanks you for your post!”

Whoops! Corrected it.

Thanks again!

Branch Rickey on March 17, 2009 at 11:59 AM

As I understand it (I admit I am a simpleton) the CRA caused businessmen who by practice and tradition subscribe to sound business principles and sound management in order to maximize their profits to make loans to certain people that previously they had or refused to issue loans to because they were deemed to high a risk; and further were deemed to have discriminated against these folks, although the reason for the discrimination was business-related and not personal or based on race or ethnic origin. And the key was that institutions were intimidated or forced by government to comply and basically engage in granting loans to questionable clients and thus work against their own self-interest.

You wonder why America is in the pickle it is in. This is the most ridiculous thing that I have ever heard.

technopeasant on March 17, 2009 at 12:00 PM

The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties.

The funds required for this purpose are obtained by a tax levied on the non-drinkers

thirteen28 on March 17, 2009 at 11:55 AM

Where is the part of the story about when Doris buys a big screen tv and we get so mad that we burn down her house.

myrenovations on March 17, 2009 at 12:00 PM

Still, the FDIC slapped East Bridgewater Savings with a rare “needs to improve” rating after evaluating the bank under the Community Reinvestment Act.

*head to desk*
*head to desk*
*head to desk*

Count to 10 on March 17, 2009 at 11:51 AM

Cheers mate! Too funny – and waaaay too true!

Branch Rickey on March 17, 2009 at 12:01 PM

technopeasant on March 17, 2009 at 12:00 PM

Not a simpleton – you nailed it.

Vashta.Nerada on March 17, 2009 at 12:03 PM

lorien1973 on March 17, 2009 at 11:41 AM

The same way Wall Street creates Republicans that are dependent on them.

sethstorm on March 17, 2009 at 12:05 PM

We could even up the economy by raffling off tickets. The winner gets to knock that cowboy hat off Obambi’s undeserving head.

AubieJon on March 17, 2009 at 12:06 PM

thirteen28 on March 17, 2009 at 11:55 AM

awesome

carbon_footprint on March 17, 2009 at 12:06 PM

Its like the democrats in Congress going after Sheriff Arapao (sp) for arresting illegal aliens.

ctmom on March 17, 2009 at 12:07 PM

*head to desk*
*head to desk*
*head to desk*

Count to 10 on March 17, 2009 at 11:51 AM

I have gotten to the point of no longer fighting this. I have determined that the best and only course of action now is to prepare myself and my loved ones for the inevitable collapse that is coming. The Republicans can and will do nothing to prevent this (Hell, they are as responsible for it as the Democrats in my opinion). Once the collapse occurs and the fighting is done, there can be building anew. I have come to the point of just laughing about the Bizarro world that has come to be in this country. How do you fight when good is called bad and bad is encouraged and called good? You have to just let that go and run its course. Sadly, this will hurt and because I have young children, I curse, in the strongest way possible, those responsible. I can only try to shield my girls as much as possible and teach them right from wrong, about the virtues of freedom and to have a strong faith in God.

I will be zeroing my new Sig 556 with my new Aimpoint Compt M4 this weekend.

King of the Britons on March 17, 2009 at 12:07 PM

Wanna confuse a liberal? Ask them if they think CRA belongs on the space station.

Rovin on March 17, 2009 at 12:08 PM

The same way Wall Street creates Republicans that are dependent on them.

sethstorm on March 17, 2009 at 12:05 PM

Let me know when “Wall Street” acquires the police powers of the state to forcibly take that which belongs to you in order to provide for those dependent Republicans of which you speak.

CDeb on March 17, 2009 at 12:08 PM

Sadly, the GOP is too stupid to seize this issue as a perfect example of being blind to the unintended consequences of too many liberal legislative efforts.

Stop being politically correct, and start acting like adults. Shelby Steele just told us that the minority vote is lost to the GOP anyway because there’s no way to out-cotton candy the Dems. So draw a stark contrast and show the benefits of personal responsibilty and individual freedom over waiting by the mailbox for a check from the government. There are success stories in the minority communtity; get their stories out.

BuckeyeSam on March 17, 2009 at 12:09 PM

Heh. The ACORN thugs couldn’t find this bank and shake ‘em down, because they didn’t have a website. It looks like going under the radar is the way to stay in business in this Through the Looking Glass administration.

chunderroad on March 17, 2009 at 11:57 AM

Actually, they did find them and that’s why they got whacked. The are right next door to and have branches in, Brockton, MA a economically depressed city. The fact that Bridgewater didn’t get sucked into the Brockton morass is amazing to me. He must be one strong willed CEO. He must have been under a lot of pressure to make subprime loans there for a long time…

TheBigOldDog on March 17, 2009 at 12:11 PM

We keep bashing these Democratic politicians, but we (meaning the collective American public) keep electing them. We get the government we deserve. Those of us conservatives who did not, do not, and will not vote Democratic, haven’t done a good enough job talking some sense into those who do vote Democratic.

Wasn’t it Marx who said “Democracy is the road to socialism?” And here we are voting ourselves some money from the national teat. Hmmmm . . .

Special K on March 17, 2009 at 12:11 PM

East Bridgewater is a sleepy little town. It probably didn’t give enough loans out to unqualified minorities cause the closest city is Brockton, and that’s too far for welfare recipients to go via cab to go find this bank. Hence the need for an online presence, so they can service bad loans, and be beholding to our Dear Leader. Rural white New Englanders are so crafty.

Little Boomer on March 17, 2009 at 12:12 PM

King of the Britons on March 17, 2009 at 12:07 PM

Amen brother! Well stated…

Keemo on March 17, 2009 at 12:13 PM

Rush just said that Chris Dodd added a line in the bailout that exempted executive bonuses from taxation if they were contracted for before a certain date, and the AIG bonuses fit that criteria.

AubieJon on March 17, 2009 at 12:13 PM

Irrational idiocy.

redfoxbluestate on March 17, 2009 at 12:13 PM

Wanna confuse a liberal? Ask them if they think CRA belongs on the space station.

Rovin on March 17, 2009 at 12:08 PM

Damn, that’s funny!

Keemo on March 17, 2009 at 12:14 PM

There is legislation moving now in Congress to EXPAND the CRA to non-federally-regulated institutions such as independent mortgage companies and insurance companies.

And the NAACP just announced a huge “fair lending” lawsuit against HSBC and Wells Fargo, with more national bank defendants soon to be added.

These idiots never learn.

rockmom on March 17, 2009 at 12:16 PM

I would say that there are small town banks all over America that know how to run their business in the Black without Obama and the Democrats’ “help”.

kingsjester on March 17, 2009 at 12:17 PM

Rush just said that Chris Dodd added a line in the bailout that exempted executive bonuses from taxation if they were contracted for before a certain date, and the AIG bonuses fit that criteria.

AubieJon on March 17, 2009 at 12:13 PM

Dodd got something like $140,000 from AIG executives for his Senate and Presidential campaigns. He shook down all the banks and big insurers for money for his presidential campaign.

rockmom on March 17, 2009 at 12:18 PM

Let me know when “Wall Street” acquires the police powers of the state to forcibly take that which belongs to you in order to provide for those dependent Republicans of which you speak.

CDeb on March 17, 2009 at 12:08 PM

Thanks CDeb; I really wanted to go off on SethStupid but your approach was much better and dead-on correct.

Branch Rickey on March 17, 2009 at 12:19 PM

We keep bashing these Democratic politicians, but we (meaning the collective American public) keep electing them. We get the government we deserve. Those of us conservatives who did not, do not, and will not vote Democratic, haven’t done a good enough job talking some sense into those who do vote Democratic.

Special K on March 17, 2009 at 12:11 PM

I do not deserve this.

I have talked until I was blue in the face. I have given concrete examples to my Democrat circles. I have talked in really, small, simple words to reach them. I have actually drawn flow charts of corruption. I have bought books for people and books on tape. I have been as nice a possible in my explanations and even resorted to saying “well I agree with you…” when I really didn’t, just to further along the understanding. I actually “helped” my grandmother fill out her absentee ballot the “right” way.

Alas, I have become that crazy person that nobody wants to be around.

But I do not deserve any of this.

myrenovations on March 17, 2009 at 12:19 PM

It’s like holding back the straight-laced valedictorian because he “doesn’t work well with others” for not choosing the worst students as study partners.
.

Christien on March 17, 2009 at 12:20 PM

These idiots never learn.

rockmom on March 17, 2009 at 12:16 PM

You’re assuming they care…

TheBigOldDog on March 17, 2009 at 12:22 PM

Actually, they did find them and that’s why they got whacked. The are right next door to and have branches in, Brockton, MA a economically depressed city. The fact that Bridgewater didn’t get sucked into the Brockton morass is amazing to me. He must be one strong willed CEO. He must have been under a lot of pressure to make subprime loans there for a long time…

TheBigOldDog on March 17, 2009 at 12:11 PM

It is amazing. My in-laws lived in Brockton for many years and my husband taught at he high school. What a hellhole.

That’s probably why the bank hasn’t done a website or a lot of advertising. If you don’t get the applications to begin with, you don’t have to report your denials. All mortgage originators have to report their applications and denials by race and gender, under the Home Mortgage Disclosure Act. The bank regulators are very tough on banks with high denial rates for minorities, and the ACORNs and NACAs of the world love to sue banks using the HMDA data.

rockmom on March 17, 2009 at 12:22 PM

It’s quite ingenious disingenuous really.

lorien1973 on March 17, 2009 at 11:41 AM

FIFY.

College Prof on March 17, 2009 at 12:25 PM

The same way Wall Street creates Republicans investors that are dependent on them.

sethstorm on March 17, 2009 at 12:05 PM

FIFY. Anyone with a 401K is dependent on the market, so are we led to believe that only Republicans have retirement accounts? I think not. Next!

College Prof on March 17, 2009 at 12:28 PM

BuckeyeSam on March 17, 2009 at 12:09 PM

They have a horse in the race as well.

Let me know when “Wall Street” acquires the police powers of the state to forcibly take that which belongs to you in order to provide for those dependent Republicans of which you speak.

CDeb on March 17, 2009 at 12:08 PM

I’ll settle with labor law attorneys who find “technically legal” reasons to bypass citizens. They forcibly take work out of our nation by questionable means that are close to treason. That action being a benefit to Wall Street in their wish to evade a regulatory action.

sethstorm on March 17, 2009 at 12:34 PM

Remember Paulson’s first proposal to Congress to save the banks? More like a ransom note.

Remember how the Treasury never wants to discuss the bank bailouts? Details are vague, just do it mindset.

I think if the President were to come clean on this disaster, all hell would break loose.

Especially in China where the sentence to fraud is death.

getalife on March 17, 2009 at 12:34 PM

Let’s get this straight. We bail out the people who made all sorts of bad loans, and we punish the people who didn’t? How’s that for accountability?

Why are you surprised? Isn’t that exactly what the home mortgage bailout is all about? Isn’t that exactly what the government “stimulus” package is all about? Isn’t that why O wants to tax the evil wealth? No new news here.

katablog.com on March 17, 2009 at 12:35 PM

They forcibly take work out of our nation by questionable means that are close to treason. That action being a benefit to Wall Street in their wish to evade a regulatory action.

sethstorm on March 17, 2009 at 12:34 PM

Getting slapped by the invisible hand smarts, huh?

Vashta.Nerada on March 17, 2009 at 12:36 PM

I’ll settle with labor law attorneys who find “technically legal” reasons to bypass citizens. They forcibly take work out of our nation by questionable means that are close to treason.

Ever think that if the US was a little more friendly to business (ie didn’t tax them into oblivion to pay for stupid govt programs), we’d not have to worry about where are jobs go?

katablog.com on March 17, 2009 at 12:38 PM

I’ll settle with labor law attorneys who find “technically legal” reasons to bypass citizens. They forcibly take work out of our nation by questionable means that are close to treason. That action being a benefit to Wall Street in their wish to evade a regulatory action.

sethstorm on March 17, 2009 at 12:34 PM

The problems you mention here are the result of the regulatory and legislative powers of the federal government. Theft is theft is theft and it is a crime and should be punished. But building a complex regulatory web that only powerful and connected companies can successfully navigate is not the problem of Wall Street, but of the power that government has over those with money. Just like I don’t blame lobbyists that politicians take their money in return for favors. No one would give our government money voluntarily if there was no expectation of some sort of benefit from it. sethstorm, if you would trace the root of the problems you see on Wall Street, you would find, 95% of the time, that they begin in Congress.

King of the Britons on March 17, 2009 at 12:39 PM

There is legislation moving now in Congress to EXPAND the CRA to non-federally-regulated institutions such as independent mortgage companies and insurance companies.

And the NAACP just announced a huge “fair lending” lawsuit against HSBC and Wells Fargo, with more national bank defendants soon to be added.

These idiots never learn.

rockmom on March 17, 2009 at 12:16 PM

I don’t know, rockmom. It seems to me that the racist shake-down artists have learned very well. They’ve succeeded in gaming the system — probably beyond their wildest dreams. They even have one of their own in the White House now. And the hits just keep on coming. Of course, like all aggressive parasites, they will eventually kill the host. But in the meantime, it’s raining “free” money for deadbeats all over the country.

AZCoyote on March 17, 2009 at 12:40 PM

As somone who has been a mortgage consultant for 15 years, I have been saying this about CRA for two years. You can’t fix the system by throwing money at it, you have to fix the system! then help people that got caught in the system. Although right now they have tightened credit so as to get rid of most of the lending that fell under CRA, including no more no income/no asset loans. Right now first time home ownership is getting busy as the affordability for first time home buyers due to depreciated homes is the best it has been in 20 years.

CRA needs to be addressed or we will just repeat this mistake in 5 years when the economy turns around again.

momof2 on March 17, 2009 at 12:40 PM

Obviously, that bank isn’t doing its part in redistributing money.

None of this is supposed to end until the middle class has trickled down its wealth, and all well-run businesses have been brought to their knees.

If you think you are going to have anything left at all by the time it’s over, think again.

Alana on March 17, 2009 at 12:44 PM

Hey! I know! We need a theme song to properly worship the O’s administration! .. and I nominate this one. I found myself singing it this morning. I had not even thought of it in years. It is, as you probably know from the musical Big River: Huck Finn …. Someone one smarter than I am might be kind enough to provide a link so that it can be heard.

GUV’MENT

Well, you dad gum guv’ment

You sorry so and so’s

You got your damn hands in every pocket

Of my clothes

Well you dad gum, dad gum, dad gum, guv’ment

Oh, don’t you know

Oh, don’t you love ‘em sometimes

You dad gum guv’ment

You better pay attention

You’re sittin’ up there like a fool’s convention

Well, you dad gum, dad gum, dad gum guv’ment

Oh don’t you know

Oh don’t you love ‘em sometimes

Well, you soul sellin’ no good

Sons-of-a dead pan shoe fittin’ fire starters

I ought to tear your no good God dang

Preambulatory bone frame

And nail it to your guv’ment walls

All of you, you, bastards

You dad gum guv’ment

You sorry rakafratchits

You got yourself an itch

And you want me to scratch it

Well, you dad gum, dad gum, dad gum guv’ment

Oh, don’t you know

Oh don’t you love ‘em sometimes

You dad gum guv’ment

You sorry sons-of-bitches

You got your damn hands in every pocket of my britches

Well, you dad gum, dad gum, dad gum guv’ment

Oh don’t you know, don’t you love ‘em sometimes

el rey on March 17, 2009 at 12:49 PM

Ever think that if the US was a little more friendly to business (ie didn’t tax them into oblivion to pay for stupid govt programs), we’d not have to worry about where are jobs go?

katablog.com on March 17, 2009 at 12:38 PM

As I now work for the Minister of Culture, I am going to ask you nicely once to self-cenusre yourself from spewing reason and logic. The federal government cannot have Americans believing that profitable businesses are good.

WashJeff on March 17, 2009 at 12:50 PM

Working in the banking industry for the last 7 years I have to say that the CRA is crammed down the throats of ALL employees, not just lenders. On a yearly basis you are tested on your knowledge of the CRA. That yearly testing is a federal regulation.
For those of you who want to know how your bank is investing your money in the CRA go to your local branch and ask to review it. They are REQUIRED to provide you with that information. It is considered a matter of public record. To be honest with you that is how I determine if I am going to put my money in their bank. I pay fees and interest just like every one else. It is the one way you get to determine how your money is spent.

milwife88 on March 17, 2009 at 12:51 PM

These idiots never learn.

rockmom on March 17, 2009 at 12:16 PM

These are not idiots, this is by design, this is class warfare being waged against us. We need to act soon or all will be lost, be it a tax revolt, march on Washington or an all out blood bath. Somethings got to give!

dmann on March 17, 2009 at 1:03 PM

Ever think that if the US was a little more friendly to business (ie didn’t tax them into oblivion to pay for stupid govt programs), we’d not have to worry about where our jobs go?

katablog.com on March 17, 2009 at 12:38 PM

Business hasn’t been any bit friendly for the last ~30 odd years.

If they didn’t create the conditions that brought forth regulations struck in vengeance, they might not have to ask to turn down the heat.

As I’ve said frequently – I’d be open to deep, massive tax cuts if that meant near-immediate/instant relief to citizens whom have been laid off.

sethstorm on March 17, 2009 at 1:05 PM

sethstorm on March 17, 2009 at 12:05 PM

getalife is now engaging with us, has joined in the conversation. Take the lead seth, join in the conversation rather than what you are/have been doing. We’re all in this together.

Keemo on March 17, 2009 at 1:11 PM

Keemo on March 17, 2009 at 1:11 PM

Make some sense please.

sethstorm on March 17, 2009 at 1:15 PM

How do I know both parties are not serious about fixing the mess?

They haven’t repealed the CRA and its follow-ons in the 1990′s.

That is a definite ‘no brainer’ which indicates the level of cranial activity in Congress is now at zero and acts by pure reflex, only.

ajacksonian on March 17, 2009 at 1:15 PM

thirteen28

May I suggest an addition to your post

At the bank’s corporate headquarters, expert bankers transform these customer assets into BEERCHITS, ALKYBONDS and PUKEBONDS

The ratings agency, wanting to keep the bank’s business, stamps the instruments with a AAA rating.

These securities are then traded on markets worldwide. No one really understands what these names mean and how the securities are guaranteed.

Xiphos on March 17, 2009 at 1:21 PM

…He notes one small bank that has managed to weather the storm by lending carefully and within its means.

Geez, everybody’s a critic!

Look, Obama has only been in office for two months. You can’t expect him to stomp out all the bugs in the system overnight.

Mark my words: these few holdouts will all be run out of business by this time next year. If you want access to money, you’ll only have ONE place to go for it.

logis on March 17, 2009 at 1:22 PM

It was the Community Reinvestment Act Pandering.

Acronym = CRAP.

Steve Z on March 17, 2009 at 1:23 PM

When government decides that something should be a “right” when historically you had to work hard for it- bad things happen.
Reagan gets greater as a president every year with this quote:
“The most terrifying words in the English language are- I’m from the government and I’m here to help.”

jjshaka on March 17, 2009 at 1:27 PM

jjshaka on March 17, 2009 at 1:27 PM

Problem.

It’s now:

“The most terrifying words in the English language are- I’m from the business community and I’m here to help.”

sethstorm on March 17, 2009 at 1:29 PM

If they didn’t create the conditions that brought forth regulations struck in vengeance
sethstorm on March 17, 2009 at 1:05 PM

Like vengeance against sound business practices as highlited in this post, like vengeance against those that play by the rules, like vengeance against the Bill of Rights. Yeah Seth these are the regulations you honor, those that serve to destroy independence, wealth and freedom, those hidden in the fallicy of hope and change, your pathetic!

dmann on March 17, 2009 at 1:32 PM

Here in Connecticut, I’ve heard a lot of ads on the radio for a local savings bank (whose name I won’t mention), which says “We don’t make sub-prime loans, so we still have money to offer you competitive fixed-rate loans…”

This bank acted RESPONSIBLY and DIDN’T make bad loans, and still has MONEY to lend! Shhhh–watch out what you say in that ad, or Big Brother Barack will send the CRA Police (CRAP) after you!

Steve Z on March 17, 2009 at 1:34 PM

Sethstorm is only here right now because getalife has gone rogue over in the AIG False Outrage thread.

myrenovations on March 17, 2009 at 1:35 PM

Make some sense please.

sethstorm on March 17, 2009 at 1:15 PM

O.K., enough said, you’re not ready yet. Carry on.

Keemo on March 17, 2009 at 1:36 PM

This bank acted RESPONSIBLY and DIDN’T make bad loans, and still has MONEY to lend! Shhhh–watch out what you say in that ad, or Big Brother Barack will send the CRA Police (CRAP) after you!
Steve Z on March 17, 2009 at 1:34 PM

Actually, it’s spelled “IRS”. The plan from the beginning is simple, tried and true: Take money away from the people who made good investments, and give it to the people who made bad investments.

The goal of Socialists is not to destroy ALL businesses. Only the profitable businesses are a threat and must be destroyed; the rest can easily be co-opted.

logis on March 17, 2009 at 1:38 PM

dmann on March 17, 2009 at 1:32 PM

As I’ve said elsewhere, I believe that businesses can be more honest, less evasionary, and pro-US citizen.

sethstorm on March 17, 2009 at 1:46 PM

Working in the banking industry for the last 7 years I have to say that the CRA is crammed down the throats of ALL employees, not just lenders. On a yearly basis you are tested on your knowledge of the CRA. That yearly testing is a federal regulation.
milwife88 on March 17, 2009 at 12:51 PM

I was a real estate appraiser for almost 20 years, 15 being with one of the biggest banks in the U.S. (Chase) and they started cramming CRA down our throats back in 1994/95. And to make matters 10 times worse, FHA fell right in line and loosened up their lending guidelines to point where making loans on commercial properties started like wildfire.

The daily mantra from the bosses and the loan officers to the appraisers was “make it work, make value or you don’t work”. When the appraisers finally started pushing back, saying it was getting impossible to “make value”, Chase pushed back and got rid of their entire staff of house appraisers.

Knucklehead on March 17, 2009 at 1:49 PM

As I’ve said elsewhere, I believe that businesses can be more honest, less evasionary, and pro-US citizen.
sethstorm on March 17, 2009 at 1:46 PM

No one here is disagreeing with you. We all believe that you’re a fuzzy-headed idiot too.

logis on March 17, 2009 at 1:54 PM

Still, the FDIC slapped East Bridgewater Savings with a rare “needs to improve” rating after evaluating the bank under the Community Reinvestment Act.

I knew it! He’s a racist!

PLEASE have this bank owner on O’Reilly or something!!!

(I put my cash in a similar bank but I will not reveal its name. I don’t want to sic the Feds on them.)

PattyJ on March 17, 2009 at 1:55 PM

Don’t worry, they’ll find out soon enough who those evasionary banks are.

sethstorm on March 17, 2009 at 1:59 PM

The daily mantra from the bosses and the loan officers to the appraisers was “make it work, make value or you don’t work”. When the appraisers finally started pushing back, saying it was getting impossible to “make value”, Chase pushed back and got rid of their entire staff of house appraisers.

This is why Forbes and Buffett want mark to market suspended. Houses cannot have a zero value.

drjohn on March 17, 2009 at 2:01 PM

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