On May 3, 9:00*am, ПеаБраин wrote:
On May 3, 9:06*am, Old Pif wrote: On May 3, 8:24*am, ПЈö'Донован wrote:
Democrat
politicians forced banks to make such loans to their poor risk
constituents who probably wouldn't be able to pay the loans back.
.................................................. ................... They forced them how? What was exactly the actual instrument of
alleged coercion?
.................................................. .................................................. .................
Community Reinvestment Act
From Wikipedia, the free encyclopedia
"The Community Reinvestment Act (CRA, Pub.L. 95–128, title VIII of the
Housing and Community Development Act of 1977, 91 Stat. 1147, 12
U.S.C. § 2901 et seq.) is a United States federal law designed to
encourage commercial banks and savings associations to help meet the
needs of borrowers in all segments of their communities, including
low- and moderate-income neighborhoods.[1][2][3] Congress passed the
Act in 1977 to reduce discriminatory credit practices against low-
income neighborhoods, a practice known as redlining.[4][5]
The Act instructs the appropriate federal financial supervisory
agencies to encourage regulated financial institutions to help meet
the credit needs of the local communities in which they are chartered,
consistent with safe and sound operation (Section 802.) To enforce the
statute, federal regulatory agencies examine banking institutions for
CRA compliance, and take this information into consideration when
approving applications for new bank branches or for mergers or
acquisitions (Section 804.)[6]
Enforcement
The Community Reinvestment Act of 1977 seeks to address discrimination
in loans made to individuals and businesses from low and moderate-
income neighborhoods.[7] The Act mandates that all banking
institutions that receive Federal Deposit Insurance Corporation (FDIC)
insurance be evaluated by Federal banking agencies to determine if the
bank offers credit (in a manner consistent with safe and sound
operation as per Section 802(b) and Section 804(1)) in all communities
in which they are chartered to do business.[3] The law does not list
specific criteria for evaluating the performance of financial
institutions. Rather, it directs that the evaluation process should
accommodate the situation and context of each individual institution.
Federal regulations dictate agency conduct in evaluating a bank's
compliance in five performance areas, comprising twelve assessment
factors. This examination culminates in a rating and a written report
that becomes part of the supervisory record for that bank.[8]....."
"CONSERVATIVES" have absolutely no credibility at all.
that is a lie. back it up with real facts, and you will be the first
to collect a $100,000.00 reward that has been offered for proof of
your conservative lie. go ahead liar, i will give you the info, go
collect the money, then get back to me liar.
Get Me ReWrite!
By Barry Ritholtz - May 13th, 2010, 7:20AM
My
approach to everything I have written, studied and analyzed in
this
space is pretty straight forward: Start with the data and
evidence
and
go forward from there. Figure out what the “Truth” is;
try to
get as
close to the objective reality beneath the noise in
order to
make
intelligent investing decisions for myself and my
clients.
There are others who do not share this objective. Their goals are
either political (winning the next election) or ideological (having
their belief system become dominant). Truth is irrelevant to these
people.
Not surprisingly, these folks — many of whom contributed to
the
crisis
in a might way — are desperately trying to duck
responsibility
for
what happened. Those who helped cause the crisis
are engaged in
an
ongoing effort to rewrite its history.
Their
goal? Exonerate their own bad behavior, throw off any
responsibility
to the collapse, blame anything but their own ideology
and horrific
decision making. They want to keep pushing their tired
political
agendas, despite the damage they may have caused.
When writing
Bailout Nation, I tried to steer clear of partisan
finger
pointing.
I kept the focus on what actually occurred, what
could be
proven
mathematically. I blamed Democrats and Republicans —
not
equally,
but in proportion to their what they did. Unsupported
theories,
tenuous connection, loose affiliations were not part of the
analysis.
Every legislative change, each regulatory failure, all
corporate
actions, to be blameworthy, had to manifest themselves in
actual
mathematical proof.
This led me to ascertain the following 30 year
sequence:
* * -Free market absolutism becomes the dominant
intellectual
thought.
* * -Deregulation of markets, investment
houses, and banks
becomes a
broad goal: This led to Glass Steagall
repeal, Derivative
exemptions,
Investing house leverage exemptions,
and a new breed of
unregulated
non bank lenders.
* * -Legislative
actions reduce or
eliminate much of the regulatory
oversight; SEC
funding is weakened.
* * -Rates come down to absurd levels.
* * -
Bond managers madly
scramble for yield.
* * -Derivatives, non-bank
lending, leverage,
bank size, compensation
levels all run away from
prior levels.
* * -
Wall Street securitizes whatever it can to
satisfy the demand for
higher yields.
* * -”Lend to securitize”
nonbank mortgage writers
sell enormous
amounts of subprime loans to
Wall Street for this
purpose.
* * -To meet this demand, non bank
lenders collapse lending
standards,
leading to a credit bubble.
* *
-The Fed approves of this
innovation.
* * -Housing booms, then
busts
* * -Credit freeze,
market collapse recession.
You will note
that the CRA is not part of this sequence. I could find
no evidence
that they were a cause or even a minor factor. If they
were, the
housing bubbles would not have been in California or S.
Florida or Ls
Vegas or Arizona — Harlem and South Philly and parts of
Chicago and
Washington DC would have been the focus.
Nor do I blame Fannie and
Freddie. Now understand, there is no love
lost between myself and the
GSEs. For years, I have called them
“Phoney and Fraudy.” *Since
George Bush and Hank Paulson nationalized
them, I have accused the
government of using these two as a backdoor
bailout for banks — a
hidden PPIP/TARP used to buy all the garbage
mortgages that banks are
desperate to get off their balance sheets.
Longtime readers will
recall we very publicly shorted Fannie based
upon their fraudulent
practices and horrific balance sheet.
But even I cannot reconcile the
movement to place all of the world’s
troubles at the feet of the
GSEs. Not, at least, according to the
data.
That lack of evidence,
however, doesn’t stop ideologues from making
the attempt. Consider
this attempt at rewriting the causes of the
credit crisis by Kevin
Hassett:
* * “The worst financial crisis in generations was set off
by a
massive government effort, led by the two mortgage giants, to
make
loans to homebuyers no matter whether they could make the
payments.
Lenders were willing to lend money to just about all
comers, no
matter
how low their income. Why? Because the lenders
knew Fannie and
Freddie
would purchase the loans from them for a
high price before
bundling
them into securities to sell to
investors.”
Now, this makes for a fascinating narrative that plays
into a number
of different ideological beliefs. It exonerates the
radical free
market deregulators, it ignores what the private sector
did, and it
somehow ignores the fact that Congress was controlled by
a very
conservative GOP from 1994 to 2006 — the prime period of time
covered
leading up to and including the beginning of the crisis.
But
worse than all of that, the data supporting Hassett’s position
simply
isn’t there.
Over the past 2 years, I have repeatedly asked the
people who push
this narrative to provide some evidence for their
positions. I have
offered a $100,000 if they could prove their case.
Specifically, I have requested some data or evidence that DISPROVED
the following facts:
* * -The origination of subprime loans came
primarily from non bank
lenders not covered by the CRA;
* * -The
majority of the underwriting, at leats fro the first few
years of the
boom, were by these same non-bank lenders
* * -When the big banks
began chasing subprime, it was due to the
profit motive, not any
mandate from the President (a Republican) or
the the Congress
(Republican controlled) or the GSEs they oversaw.
* * -Prior to 2005,
nearly all of these sub-prime loans were bought
by
Wall Street — NOT
Fannie & Freddie
* * -In fact, prior to 2005, the GSEs were not
permitted to purchase
non-conforming mortgages.
* * -After 2005,
Fannie & Freddie changed their own rules to start
buying these non-
conforming mortgages — in order to maintain market
share and compete
with Wall Street for profits.
* * -The change in FNM/FRE conforming
mortgage purchases in 2005 was
not due to any legislation or marching
orders from the President (a
Republican) or the the Congress
(Republican controlled). It was the
profit motive that led them to
this action.
These are data supported facts I pounded on in BN.
Of
course, folks like Hassett hate this factual history, as it
conflicts
with their goals and politics. Rather than produce
evidence,
they
create story lines unsupported by facts. *But Monkeys
love a good
narrative, and so they give that to them.
However, as an investor, I
demand evidence, data and facts. The blame
Fannie & Freddie crowd
have managed to remain blissfully data free.
They have steadfastly
ignored all calls for proof.
Its way past the time to call out their
intellectual dishonesty. If
you cannot show any data, if you cannot
prove what you are alleging
with actual facts, you need to be called
out for what it is you
actually a Proponents of a failed
philosophy.
http://www.ritholtz.com/blog/2010/05...es-of-the-cred...