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700 billion and how it happened. ( Archived) (64)

Sep 23, 2008 5:21 PM CST 700 billion and how it happened.
Indyfella
IndyfellaIndyfellaindianapolis, Indiana USA230 Threads 9 Polls 27,698 Posts
The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities (Winter of 2000)
Howard Husock


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's premise sounds unassailable: helping the poor buy and keep homes will stabilize and rebuild city neighborhoods. As enforced today, though, the law portends just the opposite, threatening to undermine the efforts of the upwardly mobile poor by saddling them with neighbors more than usually likely to depress property values by not maintaining their homes adequately or by losing them to foreclosure. The CRA's logic also helps to ensure that inner-city neighborhoods stay poor by discouraging the kinds of investment that might make them better off.

The Act, which Jimmy Carter signed in 1977, grew out of the complaint that urban banks were "redlining" inner-city neighborhoods, refusing to lend to their residents while using their deposits to finance suburban expansion. CRA decreed that banks have "an affirmative obligation" to meet the credit needs of the communities in which they are chartered, and that federal banking regulators should assess how well they do that when considering their requests to merge or to open branches. Implicit in the bill's rationale was a belief that CRA was needed to counter racial discrimination in lending, an assumption that later seemed to gain support from a widely publicized 1990 Federal Reserve Bank of Boston finding that blacks and Hispanics suffered higher mortgage-denial rates than whites, even at similar income levels.
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Sep 23, 2008 5:23 PM CST 700 billion and how it happened.
WhatUwish4
WhatUwish4WhatUwish4St. Augustine, Florida USA2 Threads 12,827 Posts
I've tried explaining this several times... but your copy is cleaner maybe.

Did you happen to see Pelosi's remarks about how this is all CLEARLY the fault of the Bush Administration?
I just can't believe the outright lies... when the factual evidence is there clear as day and a matter of public record.
Do they really think their constituants are that ignorant? And if so, what does that tell you?
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Sep 23, 2008 5:24 PM CST 700 billion and how it happened.
Indyfella
IndyfellaIndyfellaindianapolis, Indiana USA230 Threads 9 Polls 27,698 Posts
In addition, the Act's backers claimed, CRA would be profitable for banks. They just needed a push from the law to learn how to identify profitable inner-city lending opportunities. Going one step further, the Treasury Department recently asserted that banks that do figure out ways to reach inner-city borrowers might not be able to stop competitors from using similar methods—and therefore would not undertake such marketing in the first place without a push from Washington.

None of these justifications holds up, however, because of the changes that reshaped America's banking industry in the 1990s. Banking in the 1970s, when CRA was passed, 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, inhibiting competition, the most powerful defense against discrimination. With such regulatory protection, savings banks could make a comfortable profit without doing the hard work of finding out which inner-city neighborhoods and borrowers were good risks and which were not. Savings banks also had reason to worry that if they charged inner-city borrowers a higher rate of interest to balance the additional risk of such lending, they might jeopardize the protection from competition they enjoyed. Thanks to these artificially created conditions, some redlining of creditworthy borrowers doubtless occurred.

The insular world of the savings banks collapsed in the early nineties, however, the moment it was exposed to competition. Banking today is a far more wide-open industry, with banks offering mortgages through the Internet, where they compete hotly with aggressive online mortgage companies. Standardized, computer-based scoring systems now rate the creditworthiness of applicants, and the giant, government-chartered Fannie Mae and Freddie Mac have helped create huge pools of credit by purchasing mortgage loans and packaging large numbers of them together into securities for sale to bond buyers. With such intense competition for profits and so much money available to lend, it's hard to imagine that banks couldn't instantly figure out how to market to minorities or would resist such efforts for fear of inspiring imitators. Nor has the race discrimination argument for CRA held up. A September 1999 study by Freddie Mac, for instance, confirmed what previous Federal Reserve and Federal Deposit Insurance Corporation studies had found: that African-Americans have disproportionate levels of credit problems, which explains why they have a harder time qualifying for mortgage money. As Freddie Mac found, blacks with incomes of $65,000 to $75,000 a year have on average worse credit records than whites making under $25,000.

The Federal Reserve Bank of Dallas had it right when it said—in a paper pointedly entitled "Red Lining or Red Herring?"—"the CRA may not be needed in today's financial environment to ensure all segments of our economy enjoy access to credit." True, some households—those with a history of credit problems, for instance, or those buying homes in neighborhoods where re-selling them might be difficult—may not qualify for loans at all, and some may have to pay higher interest rates, in reflection of higher risk. But higher rates in such situations are balanced by lower house prices. This is not a conspiracy against the poor; it's how markets measure risk and work to make credit available.
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Sep 23, 2008 5:24 PM CST 700 billion and how it happened.
livinglarge
livinglargelivinglargein a good place, Kildare Ireland13 Threads 8,222 Posts
Ahh now Indy , cant read all that so lets cut to the chase .......................................


I agree banana banana
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Sep 23, 2008 5:24 PM CST 700 billion and how it happened.
Indyfella
IndyfellaIndyfellaindianapolis, Indiana USA230 Threads 9 Polls 27,698 Posts
WhatUwish4: I've tried explaining this several times... but your copy is cleaner maybe.

Did you happen to see Pelosi's remarks about how this is all CLEARLY the fault of the Bush Administration?
I just can't believe the outright lies... when the factual evidence is there clear as day and a matter of public record.
Do they really think their constituants are that ignorant? And if so, what does that tell you?



It's too damn long....but people can google the article. It's very telling. :(
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Sep 23, 2008 5:25 PM CST 700 billion and how it happened.
Indyfella
IndyfellaIndyfellaindianapolis, Indiana USA230 Threads 9 Polls 27,698 Posts
livinglarge: Ahh now Indy , cant read all that so lets cut to the chase .......................................
I agree




Would it help if I added pictures? laugh
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Sep 23, 2008 5:26 PM CST 700 billion and how it happened.
WhatUwish4
WhatUwish4WhatUwish4St. Augustine, Florida USA2 Threads 12,827 Posts
Forgot to add that the Bush administration tried for major reforms in 2003 and were shot down by party-line (Democratic) vote. Then McCain took another stab at it in 2005 and was also shot down by party-line vote.

So it started with Carter... was strenthened by Clinton...

And the only people who tried to FIX the damn problem was the republicans.
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Sep 23, 2008 5:26 PM CST 700 billion and how it happened.
livinglarge
livinglargelivinglargein a good place, Kildare Ireland13 Threads 8,222 Posts
Indyfella: Would it help if I added pictures?
Yeah pictures banana banana banana
laugh laugh
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Sep 23, 2008 5:28 PM CST 700 billion and how it happened.
Indyfella
IndyfellaIndyfellaindianapolis, Indiana USA230 Threads 9 Polls 27,698 Posts
Late breaking News: Clinton admires McCain and Palin. Isn't that funny ! He's pissed at Obama...LOL rolling on the floor laughing
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Sep 23, 2008 5:30 PM CST 700 billion and how it happened.
livinglarge
livinglargelivinglargein a good place, Kildare Ireland13 Threads 8,222 Posts
Indyfella: Late breaking News: Clinton admires McCain and Palin. Isn't that funny ! He's pissed at Obama...LOL
I hope Palin wears her best dress for Clinton wink
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Sep 23, 2008 5:30 PM CST 700 billion and how it happened.
Hugz_n_Kissez
Hugz_n_KissezHugz_n_KissezSomeplace, Ontario Canada82 Threads 3 Polls 34,865 Posts
Sounds like the 1 billion dollar boondoggle here in Canada...they misplaced 1 billion dollars..that was about the extent of the Liberal explanation for where all the money went!!!!!!


roll eyes uh oh dunno roll eyes
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Sep 23, 2008 5:31 PM CST 700 billion and how it happened.
Indyfella
IndyfellaIndyfellaindianapolis, Indiana USA230 Threads 9 Polls 27,698 Posts
livinglarge: I hope Palin wears her best dress for Clinton



Got a feeling it won't be blue. rolling on the floor laughing
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Sep 23, 2008 5:32 PM CST 700 billion and how it happened.
Indyfella
IndyfellaIndyfellaindianapolis, Indiana USA230 Threads 9 Polls 27,698 Posts
Hugz_n_Kissez: Sounds like the 1 billion dollar boondoggle here in Canada...they misplaced 1 billion dollars..that was about the extent of the Liberal explanation for where all the money went!!!!!!



Hell, Indiana had a 1 billion dollar surplus at one time...and government found a way to piss it away...couldn't keep it for a "rainy day fund"...as it was intended to be. doh
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Sep 23, 2008 5:32 PM CST 700 billion and how it happened.
mbcasey
mbcaseymbcaseyNorth Myrtle Beach, South Carolina USA78 Threads 7 Polls 21,350 Posts
Your post is on the mark Indy. Fannie and Freddie were misused and that shows if you give gov't agencies, even quasi ones enough power, they will hurt the country in the long run. Socialism never works.
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Sep 23, 2008 5:33 PM CST 700 billion and how it happened.
Hugz_n_Kissez
Hugz_n_KissezHugz_n_KissezSomeplace, Ontario Canada82 Threads 3 Polls 34,865 Posts
Indyfella: Hell, Indiana had a 1 billion dollar surplus at one time...and government found a way to piss it away...couldn't keep it for a "rainy day fund"...as it was intended to be.



Oh of course not....they never can...I guess if they don't spend it...It gets misplaced....either way it's gone...wave roll eyes uh oh dunno laugh
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Sep 23, 2008 5:35 PM CST 700 billion and how it happened.
Indyfella
IndyfellaIndyfellaindianapolis, Indiana USA230 Threads 9 Polls 27,698 Posts
mbcasey: Your post is on the mark Indy. Fannie and Freddie were misused and that shows if you give gov't agencies, even quasi ones enough power, they will hurt the country in the long run. Socialism never works.



Thanks Ken. I hope people can see beyond a 30 second sound bite... frustrated
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Sep 23, 2008 5:37 PM CST 700 billion and how it happened.
livinglarge
livinglargelivinglargein a good place, Kildare Ireland13 Threads 8,222 Posts
Indyfella: Got a feeling it won't be blue.
rolling on the floor laughing rolling on the floor laughing
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Sep 23, 2008 5:41 PM CST 700 billion and how it happened.
Indyfella
IndyfellaIndyfellaindianapolis, Indiana USA230 Threads 9 Polls 27,698 Posts
She'd kick him to the curb... Not a visual. laugh
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Sep 23, 2008 5:46 PM CST 700 billion and how it happened.
livinglarge
livinglargelivinglargein a good place, Kildare Ireland13 Threads 8,222 Posts
Indyfella: She'd kick him to the curb... Not a visual.
rolling on the floor laughing rolling on the floor laughing I thought you were going to say she would kick him somewhere else
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Sep 23, 2008 5:57 PM CST 700 billion and how it happened.
Indyfella
IndyfellaIndyfellaindianapolis, Indiana USA230 Threads 9 Polls 27,698 Posts
livinglarge: I thought you were going to say she would kick him somewhere else



That or get her moose gun and blow the little fell off.... new meaning to "bl** job" laugh
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