Stop Blaming It On The CRA

More testimony and evidence that the CRA is not to blame for the current crisis:

Amid the ongoing debate over mortgage lending reform, a top federal regulator took a seat before Congress last week and debunked the myth — popular among conservatives — that a law encouraging loans to low-income communities has been largely responsible for the nation’s housing crisis.

“I can state very definitively,” Sandra Braunstein, director of the Federal Reserve’s consumer and community affairs division, said during a House Financial Institutions subcommittee hearing Wednesday, “that from the research we have done, the Community Reinvestment Act is not one of the causes of the current crisis.”

As a newly minted Democrat, I honestly have ZERO idea why Republicans are so eager to blame this mess on the CRA when there simply is no evidence to support it. The CRA is not one of those things that was ever on my radar when I was unknowingly spewing wingnut talking points, but right now, anywhere you go in the wingnuttosphere and there is a full-throated and frothing rant about the evil CRA. Here is a vintage effort by Stanley Kurtz (obligatory link to Sadly, No’s! comparison of Kurtz to Big Gay Al, which makes me laugh every time I listen to it) which combines the CRA, ACORN, Fannie Mae, Obama, the Chicago Woods Foundation (Boo- AYERS!) and Bill Clinton. The only things missing were gay marriage, Iraqi WMD, and ANWR.

I hate to be this cynical, but other than just trying to avoid any blame for the mess whatsoever, the only reasons I can think of for them continuing to try to pin this current financial crisis on the CRA are pretty ugly and better left unsaid.

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82 replies
  1. 1
    Comrade General Stuck says:

    As a newly minted Democrat, I honestly have ZERO idea why Republicans are so eager to blame this mess on the CRA when there simply is no evidence to support it

    Because every rotten apple they pull out of the potential meme barrel has GOP stamped on it. So they have to reach down further and further/.

  2. 2
    Woodrowfan says:

    I honestly have ZERO idea why Republicans are so eager to blame this mess on the CRA when there simply is no evidence to support it.

    Um, not to be overly cynical but the republicans simply do not care if it is true or not. Asking a republican if something is true is like asking a blind man his favorite color.

  3. 3
    DougJ says:

    I honestly have ZERO idea why Republicans are so eager to blame this mess on the CRA when there simply is no evidence to support it.

    (a) Because the people who got loans because of the CRA are supposedly poor and black.

    (b) Because the CRA legislation passed under a Democratic president.

  4. 4
    Dave says:

    I’ll say them, John.
     
    The GOP is trying to pin the economic collapse on poor people and minorities. Because ginning up some classist/racist hate is their tonic these days. It makes me embarrassed to have ever been a Republican.

  5. 5
    blogenfreude says:

    If you can blame low and middle income (and mosty brown) people, you deflect attention from the Angelo Mozilo’s of the world.

  6. 6
    sidereal says:

    the only reasons I can think of for them continuing to try to pin this current financial crisis on the CRA are pretty ugly and better left unsaid.

    What does it mean when the accusations that are too ugly to be spoken are the accurate ones?

  7. 7
    Michael says:

    I honestly have ZERO idea why Republicans are so eager to blame this mess on the CRA when there simply is no evidence to support it.

    They need evil little brown people to blame it on, John. The Southern Strategy mandates that result in order to keep the troops riled up.

    Back when I was hanging around them, I was an evil RINO for having notions on race, religion and gender that were not incubated in the cradle of Southern White Manhood. For those guys, it always seemed that their heroes were the sorts that would gang up as an axe handle wielding mob to rout those uppity protestor types away from the Woolworth’s lunch counter.

  8. 8
    Maude says:

    Reminds me of Reagan’s Big Buck.

  9. 9
    Kit Smith says:

    DougJ pretty much nails it on the first shot. It’s a way to blame it on social spending and minorities and thus the Democrats. Proof isn’t what they want, because they’re not interested in fixing the problem. What they want is a way to blame it on Democrats and thus use it as a reason why people should listen to Republicans. They’re hacktacular like that.

    You can confirm this thesis by paying attention to the talk radio people. One of my poker buddies spews this nonsense, and because Hannity says it, well, it must be true. That’s the indicator that it’s all about pinning it on dirty hippie liberals without bruising your ideological ego.

  10. 10
    Shygetz says:

    Don’t leave it unsaid, John. It needs to be said, loudly and often by people with credibility, so hopefully the Republican Party will either pull itself out of the swamp or die already and leave room for another party. DougJ had it right, and more and more people are realizing it.

  11. 11
    Sam Hutcheson says:

    It’s very simply, John. The current financial meltdown has to have a cause. Even wingnuts acknowledge this much of reality. So the question then becomes what the cause might be. A rational observer would probably look for some lynchpin or series of events in the same general time frame to explain things. But if you do that, you almost inevitably end up placing causal blame on a series of deregulatory measures championed by Republican/conservative politicians near the end of the Clinton presidency. This comes into conflict with wingnut first principles, namely "It’s never the Republicans fault" and "There’s no such thing as too much unfettered capitalism." So you have to skip over Clinton era deregulation – taking oversight out of the market could never have bad consequences. But before Clinton, there was Bush, and before Bush there was St. Ronnie of Godliness. So you have to keep looking. Which is how you get to a little known regulation passed in 1977 by the Carter administration.

    Carter was so evil and horrible that he placed time-bomb legislation on the books, a trap that waited patiently for 30+ years before going off.

    If this stealth-legislation bomb makes less sense to you than the Jaws sequel where the shark chases the protagonist’s family down in Bermuda, please remember the target audience.

  12. 12
    DougJ says:

    Is this the MPLA or is this the Fannie Mae or is this the CRA and I thought it was the UK, or just another country.

  13. 13
    Zifnab says:

    I hate to be this cynical, but other than just trying to avoid any blame for the mess whatsoever, the only reasons I can think of for them continuing to try to pin this current financial crisis on the CRA are pretty ugly and better left unsaid.

    What do you want, John. It’s a bad strategy hinging on the willful ignorance of the general public and enough GOP buzz words to swing a ten foot pole at. Why are they blaming CRA? Because they don’t have anything else to blame it on.

    This reminds me of the Mark Foley scandal, when FAUX Noise spent the next month rediscovering Gerry Studds in between breathless gasping that Nancy Pelosi failed in her minority position to bring this to the majority leader’s attention.

  14. 14
    Martin says:

    The default answer to any crisis for Republicans since Nixon has been to scream "The nigger did it!" with the appropriate variations ("The wetback did it!", "The camel jockey did it!", etc.)

    Always funny to see people just realize that for the first time.

  15. 15

    The CRA, in and of itself, did not cause this crisis. What the CRA did was lower standards. When the standards went away, greed took over and everything else fell apart.

    This very revealing chart informs us that mortgage loans will continue to reset en mass through 2011, which means to me that more housing supply will continue to be dumped onto the market. This will continue to have large negative price pressures in high immigration areas, which will continue to reduce the value of the banks holdings.

    Then the dollar goes away and with it the social safety net. A worker in Guatemala makes $3/day. A poor Guatemalan in America gets $10/day in food stamps alone. These are more reasons why I grow my own potatoes, support tariffs, and reject Globalism.

  16. 16
    wasabi gasp says:

    Too many poor people got jammed on the first rung and dun broke the whole damn ladder.

  17. 17
    Dennis-SGMM says:

    It’s impossible to believe that the party that brought us the Southern Strategy, Willie Horton, Welfare Queens, Big Buck, and many others would in any way attempt to blame non-whites for the current financial crisis.

  18. 18
    Alan says:

    The GOP is trying to pin the economic collapse on poor people and minorities.

    What they would say is Democratic Party do-goodism forced the banks to make the bad loans. And the banks acquiesced to avert even harsher socialist torment.

  19. 19
    Zifnab says:

    @Brick Oven Bill:

    The CRA, in and of itself, did not cause this crisis. What the CRA did was lower standards. When the standards went away, greed took over and everything else fell apart.

    This is like how Clinton fooling around with Monica Lewinsky brought about the Enron collapse as people lost all their moral values.

    I mean, it’s not like the greed inherent in the game of buying and selling mortgaged backed securities would have occurred WITHOUT the CRA, right? If not for the CRA, no one would have ever thought to give unverified mortgages to people who couldn’t afford to pay them back.

    It’s all the CRA’s fault. They gave us this crazy idea and the financial sector – a notorious pack of lemmings with no control over their own investments – just chased it right off the cliff.

  20. 20
    Roger Moore says:

    I think that a lot of people are missing the really obvious target. It’s not that the CRA benefits poor minorities; it’s that it’s a government regulation that benefits poor minorities. If there’s one thing that Republicans hate more than poor brown people, it’s the government messing with their ability to steal as much money as possible the free market system. Blaming the CRA lets them hit two favorite targets with one shot.

  21. 21
    Comrade General Stuck says:

    "You start out in 1954 by saying, ‘Nigger, nigger, nigger,’ " said Atwater. "By 1968, you can’t say ‘nigger’ — that hurts you. Backfires. So you say stuff like forced busing, states’ rights, and all that stuff. You’re getting so abstract now [that] you’re talking about cutting taxes, and all these things you’re talking about are totally economic things, and a byproduct of them is [that] blacks get hurt worse than whites."

    Lee Atwater in 1981. You can add CRA to the list. But I still think it is the lack of things to blame that aren’t tied to wingnut policies that is loosening their inhibitions, because blaming it on the CRA is about as close to saying "nigger" as one can get (seems to me), without actually saying it.

  22. 22
    ** Atanarjuat ** says:

    It is pretty ugly how liberals want to willfully ignore people who agreed to mortgages that ultimately surpassed their incomes — what’s known as "bought too much house."

    This was the virtual orange at the bottom of the pile, that, once yanked out, caused the inevitable collapse.

    It’s much easier to blame Teh Evil BankurZ than those who were truly irresponsible with their mortgages (and yes, that includes all those house flippers who were in it for a quick buck).

    -A

  23. 23
    passerby says:

    Why, just today I was reading where one of the car makers is offering a car loan program especially for those who are recently out of work, you know, to help them thru hard times.

    I don’t understand. Why would a car company make a loan to someone without a job?

    Isn’t this part of the problem? cuz you know damn well, some out-of-work fool will take on that car loan.

    Isn’t this how the predatory lenders made their money?

    Who is it incumbent on to act responsibly? Maybe the whole thing isn’t CRA’s fault–there’s enough blame to go around.

    But who’s to blame when you have predatory lenders and suckers for consumers? What could possibly go wrong?

  24. 24
    TenguPhule says:

    This was the virtual orange at the bottom of the pile, that, once yanked out, caused the inevitable collapse.

    Except that it didn’t.

    It was bankers betting billions blindly on leveraged shit sandwhiches.

  25. 25
    Dennis-SGMM says:

    Because no on could have anticipated that the gutting of 30’s era regulatory reforms, complete opposition to new regulation and non-enforcement of existing regulations would lead to disaster it must be something else. If Chewbacca is a Wookie then the blame must fall on the CRA.

  26. 26
    gwangung says:

    So, according to the right wing, all those CRA loans led to the trillions and trillions of bad debt.

    Um, is it just me, or is there a VERY bad case of innumeracy here????

  27. 27
    Silver Owl says:

    The republican base is very easy to manipulate. Their number one ideology is if it helps anyone but a republican or their corporate pimps it means that is welfare for pussies.

    According to today’s republican the "free market", which isn’t free because republicans and corporations are constantly manipulating it, is their gladiator arena of proving their uber duber manliness. Until they wreck the companies or wind up in prison. Which ever comes first. It is where they have peter sword fights in jello 24/7 then brag about how brilliant and manly they are.

  28. 28
    DFH no.6 says:

    It’s not cynical, John, if the bad motives you impute to others are in fact their actual motives.

    It is ugly, but it doesn’t need to be left unsaid.

    So let’s just say it straight out: it’s racist, a continuation of the infamous Southern strategy, which never went away.

    Sure, it’s an excuse to cover up their own sins, but isn’t that one of the key components of racism (particularly when wielded by those in power)?

    It’s not like they try to hide it or anything.

    "Barack the Magic Negro" anyone?

  29. 29
    Leelee for Obama says:

    Don’t leave it unsaid, John. It needs to be said, loudly and often by people with credibility, so hopefully the Republican Party will either pull itself out of the swamp or die already and leave room for another party. DougJ had it right, and more and more people are realizing it.

    If it is left unsaid, John, it’s never forced out into the sunlight to be fried like a vampire. This is just what it seems to be, racist, classist ugliness, directed at the poorer members of American society. Most of these bastards would like nothing better than serfs. I think that’s why Hayek’s Road to Serfdom is so insulting to me. He was trying to ensure serfdom, not prevent it.

    I’m glad so many people are seeing this these days. I could never understand how basically good people could buy into this ugliness.

  30. 30
    Dennis-SGMM says:

    @passerby:
    They are also patriotically offering loans to returning deceased war veterans.

  31. 31
    different church-lady says:

    John, John, John, you poor man… you just can’t stop laboring under the impression that these people care about the truth, can you?

    Another thought springs to mind: I once read that the purpose of advertising wasn’t to get new customers, but to keep your existing customer base from defecting to other brands.

    If one subscribes to that, then the GOP strategy becomes more understandable.

  32. 32
    Napoleon says:

    It is all about blaming it on black people.

  33. 33
    Comrade General Stuck says:

    @passerby:

    It begins with the Realtor’s, who are supposed to be looking out after their clients, by ethics. That even extends to the sellers Realtor/Broker. Can anyone see Realtors/Brokers telling these uniformed people that they can’t afford a particular property when knowing the bank will grant the loan anyway, and the buyer saying fuck you, I’m buying it anyway. It might have happened but rarely Imo.

    The whole thing was a wink and nod scheme from top to bottom, and people like Paulson and Geithner and even Congresscritter’s knew what was going on, but no one really stepped of the profit rocket and called foul. So they are lying to us and probably themselves. Greed and delusion of neverending housing worth, are the likely cause, but not a valid reason.

    I’m totally ignorant on this stuff, but when I saw newspaper adds saying no down payment required, AND no credit check — AND lastly ,income not verified, I knew something was very wrong. The buyers deserve the least blame in my opinion, and I bet in many cases, none at all.

    I’m not sure about the income not verified adds,it might have been on other kinds of loans.

  34. 34

    Paulson is the lynchpin in the whole deal, by hiding bad loans in the CDOs. But the reason there were bad loans given, to people of all colors, was because the standards were lowered.

    The CRA started the ball rolling, then came this, which sent the ball accelerating down the hill, and then congress and Fannie-Freddie with their political hack boards (including Obama’s current Chief of Staff) and President Bush just kept pushing it. Our onrushing boulder is now heading straight towards the value of our currency, presently guided by Tim Geithner.

    If traditional 20% down banking standards had been kept in place, none of this would be happening. The CRA was a big part of standards being lowered.

    Speaking of going away, I’ve got to too. But with God’s will, and John’s mercy, I’ll be back later.

  35. 35
    saki says:

    Capitalist economies can not fail. I read this in a big book about a man who invented wonderful metals. Therefore, any problems we have must be due to the people who are not like that great man; i.e. they are poor and black.
    And the automobile industry problems are caused by people who showed their ingratitude for the fine beatings they got at the River Rouge plant in the 1930’s by joining the UAW.

  36. 36
    TR says:

    This was all part of the Carter Administration’s scheme to destroy capitalism. Also known as "Project Underpants Gnome."

    Step 1. Pass CRA in 1977
    Step 2. Wait thirty years.
    Step 3. ….
    Step 4. The end of profit!

  37. 37
    Laughingriver says:

    Its a dogwhistle issue John, you know it I know it. Its pure racism.

    FYI, Barry Ritholtz did the ultimate smackdown on this issue. See the questions section.

    I have fought this issue with a number of what used to be good conservative friends and have provided proof after proof while they have not been able to produce anything anything at all to support their claims.

    I am now calling this pignorance, pignorance is someone who is ignorant of the facts on a particular issue and has an opinion contrary to those facts, who when presented with the facts becomes pig-headed about their opinion fighting against you harder and harder.

    These people get ideas or theories in their head that sound logical to them but are utterly false and yet they simply cannot under any circumstance allow facts to influence their views.

  38. 38
    passerby says:

    About the car company’s offering to cover payments in the event of job loss:

    "It really attacks one of the key challenges in the [car] market right now, and that’s confidence in the consumer’s ability to make their car payment," said Tim Longnecker, automotive industry executive for Acxiom Automotive, a marketing consulting firm. "I think they’re good programs and I think they will spur demand."

    The almost dead are preying on the dying.

  39. 39
    Zifnab says:

    @** Atanarjuat **:

    It is pretty ugly how liberals want to willfully ignore people who agreed to mortgages that ultimately surpassed their incomes—what’s known as "bought too much house."

    Oh those silly silly ignorant people, agreeing to mortgage loans with balloon payments and variable interest rates that often never even touched the balance. They clearly purchased too much house. And their mortgages were then packaged up into CDOs, marked at full value, and used as collateral in increasingly risky leveraged purchasing of more CDOs, expanding the market for bad loans.

    I mean, what were these people thinking?! If someone offered me a $500k loan at $500 a month when I was only making $1000 a month at my blue collar car assembly plant, I’d tell them "Hells no! My wife and my three kids are going to stick it out in a two room rented apartment on the wrong side of the tracks, thank you very much." Cause I’m not falling for that trick.

    Meanwhile, the people who really suffer are the investment titans – the Masters of the Universe – now forced to live hand to mouth on a trillion dollars in government loans, making barely over six figures, who never ASKED to purchase all these toxic assets. No. No no no. This was all the work of the CRA.

    Carter, you bastard.

  40. 40
    Dennis-SGMM says:

    @gwangung:
    Look: once those Darkies got their hands on some mortgages they quickly rolled them up into financial instruments which they sold based on their lifetime value. They then borrowed forty-three times the money that they realized from the sale and placed gigantic bets both for and against the financial instruments actually paying off.
    It’s so simple.

  41. 41
    sgwhiteinfla says:

    John Cole

    If you want to see some unbelievable shit, what if I told you the Republicans elected in a primary to vie for Rahm Emanuel’s old seat in the House, a former freeper blogger whose racist/homophobic comments have been exposed?

    http://progressillinois.com/20.....ude-joking

    There is nothing left that Republicans can do to suprise me anymore. Totally. Un. Spoofable.

  42. 42
    Maureen Meyer says:

    Barnie Frank was on NPR today and said that the biggest contributors to the current crisis were the (unnecessary) Iraq war and out-of-control military spending on weapons development. This should be publicized more widely. Frank said that he’s been in meetings with Democratic colleagues who tell him that certain defense projects can’t be cut because it would hurt their constituencies

    Ronald Reagan was credited with bringing down the Soviet Union by forcing it to spend millions to keep up with U.S. armaments (that and the unending war in Afghanistan). How ironic now that the U.S. economy is being threatened from within by politicians trying to keep useless defense projects in their districts.

  43. 43
    Zifnab says:

    @TenguPhule: I had my house of cards set up just perfect! And then you walked in and the wind knocked them all down. This is all your fault. YOUR FAULT! How could I have anticipated that a house of cards would fall apart like this?

  44. 44
    Andre says:

    I’d be interested to know what the actual dollar value of all the CRA mortgages actually is. I think that’d put this issue in perspective.

    If it’s as small a percentage as I think it is, then it’s further evidence that this line of argument is a crock of shit. If the only thing that went wrong here was poor people defaulting in their mortgages, then the only people affected would be those people. Instead of course, financial institutions took those small amounts and magnified them by playing irresponsible risk games. That’s what turned the little shitpile into a Big Shitpile, not the poor folks.

  45. 45
    Brachiator says:

    As a newly minted Democrat, I honestly have ZERO idea why Republicans are so eager to blame this mess on the CRA when there simply is no evidence to support it.

    It is a crass appeal to the worst of the Republican base. Bill Clinton forced the government to give mortgages to "unworthy" blacks and Latinos and other irresponsibles, taking money from "normal" or real Americans, and ruining poor Phil Gramm’s wonderful plan for creating an unregulated free-market paradise in the financial industry.

    Oddly enough, you can’t find any memos or emails showing the government forcing lenders to give money to "unworthy" buyers. But it’s not just a paper trail, but a freakin’ paper avalanche which shows lenders laughing all the way to the bank as they made loans to people with no credit or income, using fees and fancy debt instruments to make big profits.

    So, it simply MUST be the government’s fault, especially Democrats. Because respectable Republicans and bankers would never cheat the public. Isn’t that right, Mr. Madoff?

  46. 46
    Bill Arnold says:

    It is pretty ugly how liberals want to willfully ignore people who agreed to mortgages that ultimately surpassed their incomes—what’s known as "bought too much house."
    I’m glad to see that you’re placing some of the blame on real estate speculators. The TV show "Flip that house" was an eye opener when it first appeared.
    The mainstream wingnut narrative, in a nutshell, continues to be that a bunch of greedy irresponsible poor people, aided and abetted by corrupt Congress members of an out-of-power party, brought down the world financial system.

    Personally, I blame the Europeans, because they are (a) fun to blame, and (b) forced the SEC to raise the allowed debt to capital ratios for major U.S. investment banks to ludicrous levels, by making sneaky EU rule changes that might have caused some loss of business to said investment banks.

  47. 47
    kay says:

    What’s embarrassing is, this isn’t fringe. "Serious" Republicans spew this nonsense, and they knew and know better.

    The biggest changes to the national landscape wrought by foreclosure are not in the areas where this program operated.

    They’re in "exurbs", formerly rural areas that are on the outer limits of urban areas.

    3 million homes in foreclosure since 2006. "The decline in in home prices and concentration of foreclosures is generally worse in outer-lying communities than in central city or closer-in suburbs." That’s from Moodys, in today’s WSJ.

    In other words, Bush Country.

  48. 48
    passerby says:

    @Comrade General Stuck:

    The whole thing was a wink and nod scheme from top to bottom, and people like Paulson and Geithner and even Congresscritter’s knew what was going on, but no one really stepped of the profit rocket and called foul. So they are lying to us and probably themselves. Greed and delusion of neverending…

    …and all the while shrugging their shoulders and asserting "I’ve done nothing illegal" as they walk away with the money they earned for a hard day’s work.

  49. 49
    The Moar You Know says:

    I honestly have ZERO idea why Republicans are so eager to blame this mess on the CRA when there simply is no evidence to support it.

    The dogwhistle surrounding the CRA is so loud it will rupture your eardrums.

    the only reasons I can think of for them continuing to try to pin this current financial crisis on the CRA are pretty ugly and better left unsaid

    Young bucks buying T-bones. Welfare queens driving Cadillacs. Willie Horton on parole. Kenyan Muslims. God Damn America. Whitey tapes.

    It’s interesting to see the many different ways people find to say the same thing.

  50. 50
    Zifnab says:

    @Andre: This might illuminate you.

    http://greyfalcon.net/cra.png

  51. 51
    mantis says:

    Are they saying boo or boo-ayers?

  52. 52
    mantis says:

    I hate to be this cynical, but other than just trying to avoid any blame for the mess whatsoever, the only reasons I can think of for them continuing to try to pin this current financial crisis on the CRA are pretty ugly and better left unsaid.

    And true, true, true.

  53. 53
    A Squirrel says:

    Ressentiment is their entire electoral strategy. Has been for 40 years.

    Unless you really believe they care about small government.

  54. 54
    Calouste says:

    @kay:

    There are no "serious" Republicans anymore, they have all become fringe. At least compared to say the Tories in the UK.

  55. 55
    Laughingriver says:

    Brick Oven Bill.

    CRA did not lower standards, it in fact has high standards, a lot of federal oversight and CRA instutions are put through detailed examinations on a regular basis

    PLease see this article about what the CRA is and isn’t

    Money quote from the bottom of that article…

    This is a an intellectually silly argument from other perspectives also. Why was there no credit/housing meltdown from 1977 to 2005? Why did 30 other countries, none of which have are covered by the CRA, have a remarkably similar housing boom and bust to the USA?

  56. 56

    What is frightening is the degree to which it is working. My so-blue-she’s-red (nudge, nudge, wink, wink) MIL attributed the financial collapse to "mortgages given to immigrants." I immediately argued back, but she remained mostly unconvinced. Later I forwarded the Taibbi article to her, which seems to have convinced her, but still.

    Now she is older, and gets much of her news from print and televised media. She supported Hillary in the primaries, because Obama lacked "experience" (read Tibet), but came around once Biden was selected as the Veep (I still wish Joe weren’t, or wasn’t, so comfy with the CC companies, but she liked his ForPol creds). But I still expected more from her, and that the "the immigrants took our economy" meme got any traction worries me.

  57. 57
    JWW says:

    John,

    Is it left unsaid because you don’t want to see or you refuse to see. Maybe because you don’t have a clue. If you don’t have a clue(as I suspect) don’t blog about it. If you do, relay the facts!

  58. 58
    Brachiator says:

    @** Atanarjuat **:

    It is pretty ugly how liberals want to willfully ignore people who agreed to mortgages that ultimately surpassed their incomes—what’s known as "bought too much house."

    Here’s the deal, and it’s coming from someone who is not necessarily liberal, but who knows about taxes, finance, and lending. So pay attention.

    The mortgage companies crafted very solid rules based on years of experience to determine who best qualified for loans, and who was most likely to be able to pay the loans back.

    And then they threw their own rules out the window and willfully and knowingly made loans to people who were likely to default.

    And then the lenders came up with a drug, uh, a mathematical model which they used to convince themselves that their deliberate folly could be sustained and make them huge profits.

    And now they are floating the Big Lie that it was somebody else, the big bad gummint, that forced them to make loans to people who did not qualify for them.

    And everyone told their clients that ability to pay did not matter because they could always re-finance and cover any new debt. And the masters of the financial universe at the Fed and the Treasury Department went along with this nonsense.

    The lenders were the doorkeepers. Had they not violated their own rules, we wouldn’t be dealing with the result of their greed and irresponsibility.

  59. 59
    gwangung says:

    I am now calling this pignorance, pignorance is someone who is ignorant of the facts on a particular issue and has an opinion contrary to those facts, who when presented with the facts becomes pig-headed about their opinion fighting against you harder and harder.

    Ah. You mean creationists.

    I’d be interested to know what the actual dollar value of all the CRA

    Oh, all those poor people owned SO MUCH LAND that was worth SO MUCH that brought all those poor billionaires and millionaires down. Even when their default rate was LOWER than those in upper middle and upper class areas.

    Hell, this doesn’t even pass the sniff test. Sheer rank innumeracy that doesn’t stop to think if it makes sense.

  60. 60
    gwangung says:

    What is frightening is the degree to which it is working. My so-blue-she’s-red (nudge, nudge, wink, wink) MIL attributed the financial collapse to "mortgages given to immigrants." I immediately argued back, but she remained mostly unconvinced.

    Should have asked her to do the math…how do poor people end up making trillions of dollars of debt….

  61. 61
    Adrienne says:

    I’d be interested to know what the actual dollar value of all the CRA mortgages actually is. I think that’d put this issue in perspective.

    It’s a relatively low amount. Also, the requirements are rather stringent and the program is administered in such a way that seriously hinders the ability to defraud the system. As such, CRA mortgages actually have a markedly lower than average rate of default/foreclosure – particularly now.

    I would also note that the epicenters of the housing boom and subsequent bust do not overlap very much with the areas where the CRA loans are most likely to be made. Most urban inner city areas did not experience the boom and, while their property value is falling somewhat, it is not dropping anywhere near as fast as the places where the foreclosure crisis is the worst – Phoenix, Florida, Nevada, Orange County, CA.

    Yeah, because the OC has, like, soooo many brown people right?

  62. 62

    In fact, the CRA served to reduce the amount of risk in the financial system and limit the amount of mortgage debt packaged into MBSs.

    Loans from banks – federally insured deposit institutions, the only ones covered by the CRA – in CRA-covered neighborhoods were considerably less likely to go into default, to be unaffordable, and to involve risky features like balloon ARMs than loans that other entities (like Countrywide) in those same neighborhoods. This is unsurprising, because the CRA compels lenders to keep those loans on their books instead of sell them, because the bank loses its CRA credits if they sell the loan. Ergo, banks lending because of the CRA had an incentive to be quite a bit more responsible than the non-banks they were competing against.

    The effect, therefore, was for the CRA banks to crowd some segment of the non-bank lenders out of the market. Some number of borrowers who would have otherwise gone with some shyster mortgage company were able to instead get a loan from a bank. The Cato Institute actually put out a paper a few years ago calling for the elimination of the CRA on the grounds that – get this – it was no longer necessary, because there were so many non-bank mortgage lenders offering all sorts of groovy, innovative mortgage products in those neighborhoods.

    In order to believe the lie about the CRA, you would have to believe that the people who got loans because of it – bank loans, that the bank kept on its books – would have otherwise been turned down by the company that put up fliers on the telephone poll outside the check cashing place.

    But, sadly, the stabilizing, responsible-lending-promoting, risk-minimizing effect of the CRA wasn’t enough to have any noticeable impact on the overall financial system, because the number and dollar value of mortgages in redlined neighborhoods is such a tiny fraction of the overall credit market.

  63. 63
    Rick Taylor says:

    As a newly minted Democrat, I honestly have ZERO idea why Republicans are so eager to blame this mess on the CRA when there simply is no evidence to support it.

    As Sam Hutcheson said, it’s really simple. What we’re witnessing is the collapse of conservative ideology, the view that government is always the problem, free markets always the solution. When corporations are collectively asking for trillions of dollars of handouts, the view that the government has no business sticking its nose in private businesses becomes untenable; and anyone who isn’t wedded to conservative ideology can see that.

    So they have to come up with some reason this all occurred that doesn’t implicate unfettered capitalists, that puts the blame on liberal policies where it must belong. I guess it’s surprising how lame their explanation is; for anyone who isn’t committed to their world view, it doesn’t pass the laugh test. Right, tens of trillions of dollars disappeared because the government was forcing poor innocent bankers to push loans to minorities. Where are the mansions they built? I mean come on, anyone who’s done business with the banks or knows someone who does knows banks were pushing mortgages because they wanted to. My nephew and his wife applied for a mortgage and they got one, and the bank commented that not only did they qualify (which was reasonable) but each of them alone individually could have qualified (and we knew that was nuts).

    This is just a measure of how bankrupt conservative ideology is now; this was the best scapegoat they were able to come up with to avoid putting the blame on unfettered capitalism. And this is how desperate they are to shore up that discredited view; that they’ll put up something so transparently ridiculous just to do so.

  64. 64

    The CRA, in and of itself, did not cause this crisis. What the CRA did was lower standards.

    If this was true – if the decline of standards was the consequence of the CRA – then we would expect loans from banks in CRA-covered neighborhoods to be more risky than, or at least just as risky as, loans from non-banks in those same neighborhoods.

    The truth, however, is just the opposite. Banks covered by the CRA were much more responsible in their lending than non-banks, in those same neighborhoods.

    Therefore, it cannot be the case that the CRA caused the erosion of lending standards, no matter how carefully certain posters parrot what they read on Red State.

  65. 65

    @gwangung: Should have asked her to do the math…how do poor people end up making trillions of dollars of debt…

    I did.

  66. 66
    HyperIon says:

    @** Atanarjuat **: are those starbursts on your handle?

  67. 67

    @HyperIon: Those are flares & chaff, to avoid the idiot-seeking pie headed his way.

  68. 68
    HyperIon says:

    I honestly have ZERO idea why Republicans are so eager to blame this mess on the CRA when there simply is no evidence to support it.

    then you have not been reading posts at this site.

    you yourself have written many posts about idiot republicans who deny reality. since when has a lack of evidence meant anything to the assholes in the GOP?

    I honestly have ZERO idea why you would make such a clueless statement.

  69. 69
    DFH no.6 says:

    So, is Atanutjob a real troll, a spoof troll, or something else?

    He (she) writes stupid, fact-free, wingnutty shit all the time (as here on this thread), so I’m having a hard time thinking "spoof".

    I mean, I’m surrounded here in Phoenix by actual wingnuts who say pretty much the same crap Atanutjob always does.

    This CRA nonsense, for instance, is real big around here, even though there are no black people living here, and the Phoenix area is one of the epicenters of the housing boom/bust, with massive home-building sprawl in all directions, speculatin’ house flippers galore, relatively low wage jobs, and the vast majority of those now upside-down or being foreclosed on being God-fearin’, upstandin’, McCain/Palin votin’, bullet-headed Saxon mother’s sons.

    You know, "normal", regular Americans. White, Republican folk.

    But still, it has to be the blacks, in cahoots with the Federal Government (which we all know has been run by liberals for the past 30+ years) who are the prime cause of our financial system meltdown. Makes perfect sense.

    Brick Oven Bill? Well, he really is something else. What, I have no idea.

  70. 70
    The Moar You Know says:

    @DFH no.6: Attaboy is a grade-A spoof. Backyard Crematory Bill is…well, I prefer to think of him as a work of art whether he is a spoof or not.

  71. 71
    HyperIon says:

    @The Moar You Know:

    Attaboy is a grade-A spoof.

    if spoofs must exist, i’d prefer GOP4ME.
    and what ever happened to santa claus and the easter bunny?
    no word of/from them for quite a while.

  72. 72
    DFH no.6 says:

    Moar, I’ll take your word, then. I’d seen "Atta" referred to as spoof before, but he sounds so exactly like what I swim in for real every day here in paradise that I had to wonder.

    If, as you say, spoof, then most definitely grade-A.

    "Backyard Crematory" Bill. Got a chuckle out of me with that one. Work of art sounds good. Kinda like "American Patriot" or whatever his name was over at Atrios’ place.

  73. 73
    2liberal says:

    Community Reinvestment Act

    sounds black to me. or should that not have been said?

  74. 74
    Silver Owl says:

    Pretty much what Atanutjob is talking is that today’s financial professionals are not actually financial professionals. They are swindlers, grifters, embezzlers and book cooking chef extraordinaire. Their education and experience warrant no respect in their fields whatsoever. They in fact are hacks, losers, substandard and have no concept of long term company survivability.

    I do have to say that with the current environment of piss poor professionals that can not and did not evaluate the repayment capability to ensure the best long term ability to survive for their company, he is correct. Financial people are not qualified for their fields.

    See most people with any sense of professionalism in their field and commitment to the company and their revenue sources would use their skills to ensure that customers are matched with loans that will BENEFIT the company and not put it in jeopardy. There by also ensuring that the company has a customer that will RETURN to generate more RELIABLE revenue. For years.

    That would require business sense that Atanutjob does not possess. He’s too busy fighting peter sword fights to say he’s an uber duber manly man.

  75. 75
    Ed Marshall says:

    What are they going to say? Oops, we destroyed the fucking country, my bad?

  76. 76

    I have read your link Laughingriver per your request, and note that it accuses the New York Times of being a ‘giant pile of steaming bullshit’, and I think to myself, this might be good.

    And then I read the rest of it.

    As the article that called the New York Times a ‘giant pile of steaming bullshit’ did not mention this particular metric, I will ask you Laughingriver. Did the CRA require loan recipients to put 20% down on their home mortgages?

  77. 77
    Ed Drone says:

    Welfare queens driving Cadillacs

    Today’s "Welfare Cadillac" IS Cadillac, you know.

    Ed

    (Yeah, I know it’s a repeat, but I want it to catch on, you know?

  78. 78

    @Ed Drone: By all means. If we can destroy that horrible Reganism it will be the best thing since cancer met Atwater (and then Satan met Atwater. I love a story with a happy ending!).

  79. 79
    Laughingriver says:

    Brick Oven Bill.

    It seems that you have an assumption that the act only relates to mortgages, it does not, it involves all kinds of lending from credit cards, auto loans, business loans, mortgages, etc. The link I prodvided was to illustrate what its purpose was. There is no language in the act that outlines anything specific to the underwriting standards applied to any loan whatsoever. Here is the text of the CRA from the FDIC’s website.

    Nothing in the CRA lowers standards, all it serves to do is insure that the institution serves the needs of the entire community it receives deposits from and in general encourages an institution to make loans to all qualified borrowers in all income brackets.

  80. 80
    brantl says:

    Brick Oven Bonehead, is understanding english too hard for you?

  81. 81
    ** Atanarjuat ** says:

    @Brachiator:

    The lenders were the doorkeepers. Had they not violated their own rules, we wouldn’t be dealing with the result of their greed and irresponsibility.

    That’s a fascinating bit of apologia on behalf of overextended borrowers that you offered, but I missed the part that explains how those Evil BankurZ(tm) held guns to the heads of all those people who borrowed far more than they could ever hope to repay in monthly installments.

    All this nonstop, leftist ranting against lenders largely (and deliberately) obscures the main point: irresponsible people borrowed large amounts of money of their own free will. No one coerced them into signing legal contracts that obligated them to repay what they borrowed.

    It’s as simple as that, and no amount of spinning will change this indisputable fact.

    -A

  82. 82
    truth 1 says:

    Do a search for Obama vs. Citibank. That’s the case where someone with some money sued citibank. Several lawyers, including Obama, represented 2 individuals claiming they were discriminated against by a bank due to their color and not their ability to qualify for a loan.

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