Lemmings.

Is it start making sense now, or should I go get the education puppets my friend uses on her 2nd grade class?

Chuck Schick on August 20, 2009 at 1:28 PM

Tough sell, Chuck. This nitwit is just another know-nothing liberal troll. It’s hard talking CRA and lending policy with a liberal douche who has never worked in banking, lending, or appraisal and would counsel every American who borrowed 100% of the purchase price for their home to walk away if the value drops a dollar.

Can you imagine the impact on real estate values if this actually happened? There are literally millions of homeowners who now owe more money than their home is worth. Values would plummet again and the economy would go into free-fall.

They are the only ones who tried to stop the practice.

Basically that is just what they did.

so basically the government told the banks ‘go make bad loans to illegals and poor people, then we’ll take those bad loans, bundle them, and spread the risk’ basically a typical government ponzi scheme.

right4life on August 20, 2009 at 3:59 PM

The government didn’t do it, but they cleared the way and then stood by and cheered while the corporations did what corporations do, which is pursue maximum profit.

and why wouldn’t that loan be repaid…it wasn’t from some imaginary ‘deregulation’ it was because fannie and freddie would take the loan…in other words more government…not less.

right4life on August 20, 2009 at 3:55 PM

I agree with you. If the gov had stayed out of the sector, and not removed regulations put in place after the great depression this wouldn’t have happened. It’s clearly the governments fault. Placing the blame on the GOP and Bush isn’t really fair. The dems were more than happy to play along, since it fulfilled goals of their own, such as minority lending.

Your giving them way too much credit. The smart ones may have realized the loan wouldn’t be repaid, but by that time the loan would have been sold and off their books, and not their problem

and why wouldn’t that loan be repaid…it wasn’t from some imaginary ‘deregulation’ it was because fannie and freddie would take the loan…in other words more government…not less.

The grim legacy of the Bush era continues. The Wall Street meltdown and housing bubble that sprang directly from Bush Administration policies caused a recession that will not be put behind us quickly. Bankrupt Republican ideology bankrupting Americans

Bleeds Blue on August 20, 2009 at 11:00 AM

disingenuous excuse maker…sigh

think about what you are arguing..you’re saying the banks wanted to lend money they knew would not be repaid…and how could gov deregulation remove that risk???

it couldn’t…it was fannie and freddi that would take those loans…again government agencies…

right4life on August 20, 2009 at 3:43 PM

Your giving them way too much credit. The smart ones may have realized the loan wouldn’t be repaid, but by that time the loan would have been sold and off their books, and not their problem.

The probable failure of the loan was covered in two ways. They had insurance, which is how they got the AAA and AA ratings, and house prices never fell. Their computer models were incapable of accepting a negative number for home appreciation.

The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation’s banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being.

The CRA gives community organizers leverage over banks primarily when they request federal regulatory approval to merge. As the NCRC explains:

1998 was a year of mega-mergers that included the Bank of America and Nations Bank merger as well as Citigroup’s acquisition of Travelers; CRA pledges totaled $812 billion dollars as a result. … CRA pledges shot up again in 2003 and particularly in 2004. The year 2004 experienced watershed mega-mergers as Bank of America acquired Fleet, JP Morgan Chase acquired Bank One, and Citizens gobbled up Charter One.

link

Bleeds Blue on August 20, 2009 at 3:16 PM

Why is this dishonest vulgar stupid worthless POS troll still allowed to post here? This thread has been hijacked by lies and Demo-Lib talking points.

DFCtomm on August 20, 2009 at 3:38 PM

think about what you are arguing..you’re saying the banks wanted to lend money they knew would not be repaid…and how could gov deregulation remove that risk???

it couldn’t…it was fannie and freddi that would take those loans…again government agencies…

Touche, you bastard. Though, let me say this:

1) You can’t believe this and believe the CRA caused the crisis, so you’ve gotten on sub-group off my back. Thank you.

I never once said the CRA was the cause of it. I’ll let the others here make that case if they want.

2) The piece strongly suggests that shoddy banking practices were a contributor to to the negative equity crisis, sop banks have to eat at least part of that cake.

Agreed… but when Fannie and Freddie grows to almost $6 trillion in loans because they lower their criteria for down payments and start buying equally bad mortgages from the private banks, we have a huge problem. Remember Fan/Fred can’t legally deal in jumbos, so to take advantage of the boom, the only way up was down- and along came all the shady loans.

3) The piece does not address the causes of the net equity crisis: massive speculation, artificially low interest rates and so on.

Cheap money came first, you’re right. But a bad loan is still a bad loan.

4) It’s not just the mortgages, stupid! It’s the trillions in mis-valued derivatives that rested on the mortgages that spread the disease through the economy.

There have certainly been CDS defaults, but they always have come after the mortgage bonds get degraded and the liquidity stops. That was exactly what happened to AIG. They couldn’t get the cash to cover their margins because the lenders all saw AIG holding worthless assets.

The irony of this whole mess is that the unregulated hedge funds have held up pretty well compared to the regulated banks that keep failing. So well in fact that Obama’s P-PIP program offered hedge funds a trillion dollars in all to go into partners with Uncle Sam to try to make money off all the bad mortgage bonds out there.

5) Yes. If a bank lends me money to buy a house and I slip into negative equity, it’s the banks problem as well as mine. There is nothing to suggest that I should sacrifice my families security on the banks’s altar rather than the other way around. Will the bank carry me if I get laid off and miss payments or will it put my furniture on the curb? We both negotiated a risk; we can negotiate a way out of it or I will do to the bank what it would do to me.

But, good piece.

Bleeds Blue on August 20, 2009 at 1:43 PM

But when everybody acts in their own self interest en masse, you get a crash the size of what we’re seeing now.

its more than obvious that CRA had a great deal to do with the current housing crisis, coupled with fannie and freddie and their bundling of these bad loans.

right4life on August 20, 2009 at 2:47 PM

I would love to be able to blame it on the CRA, but you can’t. Banks want to make as much money as possible with as small a risk as possible, and so with a little financial slight of hand, and some help from the gov(deregulating) they were able to completely remove the “risk” from lending to poor candidates. Once this change had happened banks would have lent money to your house pet, because they didn’t believe they faced any risk. The CRA may have pressured banks, but they would have got to these people eventually. Greed is not racist.

The US News piece is a bit anecdotal.

Bleeds Blue on August 20, 2009 at 3:16 PM

and your pieces are just bureacratic CYA.

oh please, yeah the big bad bankers wanted to just give everyone loans…and then have them fail…right banks are known for giving away money for nothing..sure.

your ‘analysis’ doesn’t pass the smell test…and your articles are from liberal bureacrats trying to cover their ass.

CRA WAS responsible for this housing mess…and people like OBAMA used it, when he worked for ACORN to sue citibank into making more bad loans.

its rather obvious to anyone but a liberal.