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I am disappointed in you, your arguments are usually well thought out and presented cogently.
There's no point with respect to IBD. Here is their first sentence on CRA...
The CRA coerces banks into making loans based on political correctness, and little else, to people who can't afford them.
CRA does not coerce anything. It covers banks and S&L's that take federal deposit insurance. It grades those institutions on whether or not they lend back into the communities that they take deposits from. No individual borrowers are identifed by anyone but participating banks, a group that found on first setting up CRA lending that almost half their applicants were qualified at prime terms. People who qualify at prime terms CAN afford the loans they are qualifying for. The rest of the IBD article (and most others that it publishes) is no more faithful to the truth than that first sentence. If right-wingers consider IBD to be a source of reliable information, it is no wonder that they end up so totally confused over the facts.
There's no point with respect to IBD. Here is their first sentence on CRA...
The CRA coerces banks into making loans based on political correctness, and little else, to people who can't afford them.
CRA does not coerce anything. It covers banks and S&L's that take federal deposit insurance. It grades those institutions on whether or not they lend back into the communities that they take deposits from. No individual borrowers are identifed by anyone but participating banks, a group that found on first setting up CRA lending that almost half their applicants were qualified at prime terms. People who qualify at prime terms CAN afford the loans they are qualifying for. The rest of the IBD article (and most others that it publishes) is no more faithful to the truth than that first sentence. If right-wingers consider IBD to be a source of reliable information, it is no wonder that they end up so totally confused over the facts.
Is the Village Voice sufficiently left for you?
Those are the interests that surrounded Cuomo, who did more to set these forces of unregulated expansion in motion than any other secretary and then boasted about it, presenting his initiatives as crusades for racial and social justice.
Here is another interesting quote.
These groups clearly had Cuomo's ear, but he was also being pushed to commit the GSEs to more affordable and, in some cases, riskier loans by consumer organizations—groups like ACORN, which has considerable clout in New York elections.
Now that is what I have come to expect of you. However in addition to Greenspan, the St Louis Fed disagrees with you.
I don't think so...
Many factors have contributed to the growth of subprime lending. Most fundamentally, it became legal. The ability to charge high rates and fees to borrowers was not possible until the Depository Institutions Deregulation and Monetary Control Act (DIDMCA) was adopted in 1980. It preempted state interest rate caps. The Alternative Mortgage Transaction Parity Act (AMTPA) in 1982 permitted the use of variable interest rates and balloon payments. These laws opened the door for the development of a subprime market, but subprime lending would not become a viable large-scale lending alternative until the Tax Reform Act of 1986 (TRA). The TRA increased the demand for mortgage debt because it prohibited the deduction of interest on consumer loans, yet allowed interest deductions on mortgages for a primary residence as well as one additional home. This made even high-cost mortgage debt cheaper than consumer debt for many homeowners.
Many factors have contributed to the growth of subprime lending. Most fundamentally, it became legal. The ability to charge high rates and fees to borrowers was not possible until the Depository Institutions Deregulation and Monetary Control Act (DIDMCA) was adopted in 1980. It preempted state interest rate caps. The Alternative Mortgage Transaction Parity Act (AMTPA) in 1982 permitted the use of variable interest rates and balloon payments. These laws opened the door for the development of a subprime market, but subprime lending would not become a viable large-scale lending alternative until the Tax Reform Act of 1986 (TRA). The TRA increased the demand for mortgage debt because it prohibited the deduction of interest on consumer loans, yet allowed interest deductions on mortgages for a primary residence as well as one additional home. This made even high-cost mortgage debt cheaper than consumer debt for many homeowners.
Maybe you should have read down to page 38, eh?
Perhaps you missed page 36?
The growth of subprime lending in the past
decade has been quite dramatic. Using data
reported by the magazine Inside B&C Lending,
Table 3 reports that total subprime or B&C origina-
tions (loans) have grown from $65 billion in 1995
to $332 billion in 2003.
Left/right doesn't matter. Right/wrong does. As I said about the Village Voice article earlier, it isn't that their complaints about HUD aren't valid, they are, and those problems were collectively a part of why there was broadbased interest in getting honest GSE reform. But Republicans wouldn't settle for that, and you can go back and read the earlier post for the rest...
Quote:
Originally Posted by shorebaby
Here is another interesting quote.
"These groups clearly had Cuomo's ear, but he was also being pushed to commit the GSEs to more affordable and, in some cases, riskier loans by consumer organizations—groups like ACORN, which has considerable clout in New York elections."
Oh. ACORN. Aren't they a part of al Qaeda? Meanwhile, back in the real world, affordable housing is an actual initiative, and groups like ACORN with their knowledge of and familiarity with target communities are able to serve effectively as brokers between banks and individual borrowers, allowing participating banks to meet community targets with substantially reduced overhead. Having larger shares of these brokered loans securitized brings more money back for relending into those same communities. As CRA case studies would go to show, the availability of affordable mortgage capital in LMI communities had driven both property values and outside investment in community infrastructure sharply higher. Would you seriously expect ACORN et al NOT to be lobbying on behalf of programs that were delivering benefits like that?
The growth of subprime lending in the past
decade has been quite dramatic. Using data
reported by the magazine Inside B&C Lending,
Table 3 reports that total subprime or B&C origina-
tions (loans) have grown from $65 billion in 1995
to $332 billion in 2003.
When was CRA given teeth?
The point you tried to use the STL Fed paper to contest was that subprime markets were already well established by the time that CRA enforcement came along. Unfortunately for you, the Fed laid out exactly the same timeline I did, noting that subprime became a "viable large-scale lending alternative" beginning in 1986. One thing about knowing the facts is that you can count on other people who know the facts to say the same thing that you do.
In any case, CRA lending got going for real once the Clinton administration had streamlined the existing exam and reporting requirements, which would be roughly 1995. But as of January 20, 2001, CRA lending would take a nosedive, as W returned to the non-enforcement policies of Reagan and Poppy, later exempting significant numbers of banks from CRA coverage at all. At the same time, fallout from a default on Russian guaranteed debt had broadsided the non-CRA subprime lending industry. By mid-2000, six of the top ten subprime firms had disappeared. Into this double-vacuum rushed some now familiar names. Ameriquest. New Century. Countrywide. These unregulated brokers were mass marketers of subprime credit, and it was this group that drove the burgeoning subprime lending numbers, not CRA banks and S&L's.
Left/right doesn't matter. Right/wrong does. As I said about the Village Voice article earlier, it isn't that their complaints about HUD aren't valid, they are, and those problems were collectively a part of why there was broadbased interest in getting honest GSE reform. But Republicans wouldn't settle for that, and you can go back and read the earlier post for the rest...
Oh. ACORN. Aren't they a part of al Qaeda? Meanwhile, back in the real world, affordable housing is an actual initiative, and groups like ACORN with their knowledge of and familiarity with target communities are able to serve effectively as brokers between banks and individual borrowers, allowing participating banks to meet community targets with substantially reduced overhead. Having larger shares of these brokered loans securitized brings more money back for relending into those same communities. As CRA case studies would go to show, the availability of affordable mortgage capital in LMI communities had driven both property values and outside investment in community infrastructure sharply higher. Would you seriously expect ACORN et al NOT to be lobbying on behalf of programs that were delivering benefits like that?
Acorn is an organization that has been shown to be corrupt and has engaged in criminal activity. I believe there are organizations that are short of al queda that can also be undesirable. I understand some people need to engage in hyperbole to deflect from a short coming in their argument. It is seen all too often in this forum. But as you say back to reality. Acorn did coerce banks into making subprime loans by threatening suits based on CRA. And as this St Louis fed report shows default rates higher in those communities that you mention above.
Oh and to get back to the original post who was in charge of the banking committee when this fed report came out?
Still haven't seen ANYTHING AT ALL is reposne to this...
1. What exacty did Barney Frank do that helped to trigger the economic mess that we're in now?
2. What could or should Barney Frank have done that he didn't do that would have helped to prevent the economic mess that we're in now?
Shall I simply continue to assume that none of you has any actual illustration to offer at all? Can't name a single thing Frank did or didn't do that helped bring about this crisis, but continue to insist that he's somehow the one who's responsible for it? That's pretty weak, wouldn't you say?
Acorn is an organization that has been shown to be corrupt and has engaged in criminal activity.
One of its regional officers with family ties to its founders once embezzled a considerable sum of money, and when he was caught at it, the agency declined to press charges and allowed him simply to repay the money as if it had been a loan. Other than that, you have a bunch of baseless bluster manufactured by the right-wing disinformation media as hit-pieces designed to discredit an organization that works for the legitimate interests of a group of people that the right-wing doesn't happen to approve of because they typically vote substantially in favor of Democrats.
Quote:
Originally Posted by shorebaby
I believe there are organizations that are short of al queda that can also be undesirable.
Oh, so do I. The modern Republican Party would be one example I could point to, for instance. The al Qaeda reference was meanwhile simply a dig at the over-reaching and wild-eyed irrationality of the right-wing in trying in trying to attack ACORN.
Quote:
Originally Posted by shorebaby
I understand some people need to engage in hyperbole to deflect from a short coming in their argument.
And some use hyperbole for other reasons. More to the point here actually would be attempts by some to discredit government officials merely by suggesting that they had some perfectly ordinary association with ACORN, as if it would be some sort of taint to have been so much as in the same room with such people. Was there a logic in that?
Quote:
Originally Posted by shorebaby
Acorn did coerce banks into making subprime loans by threatening suits based on CRA.
Not just threats, they did sue. And they did win. But not over the terms of any loans. CRA, you'll recall, hardens earlier law that makes it ILLEGAL to refuse to lend into communities on the basis of race and certain other criteria not related to credit-worthiness. ACORN is one of a number of groups that represents the interests of those who have traditionally been the subjects of such discriminatory practices. Do you really find it threatening when such groups file suit against LAWBREAKERS to obtain and enforce the civil rights of those they represent?
Quote:
Originally Posted by shorebaby
And as this St Louis fed report shows default rates higher in those communities that you mention above.
Were they speaking of CRA defaults or simply of defaults on subprime loans, the vast majority of which were the high-cost products of unregulated and often unscrupulous private brokers?
Quote:
Originally Posted by shorebaby
Oh and to get back to the original post who was in charge of the banking committee when this fed report came out?
Saganista - Thank you for taking the time to provide us with the facts and a basic economic education. That is refreshing on a board littered with baseless accusations, misstatements, propaganda and complete nonsense.
IMHO the government could never have created the market in essentially worthless paper that the financers traded with each other in a speculative orgy of false profit. The only people that made money were the guys that bailed in mid 2007. I wonder where their ill gotten gains wound up. I believe that all the principals in this business knew they were committing a fraud but counted on the Bush administration’s ignorance and/or approval to continue the bubble. Then the perpetrators bailed and left the mess for us to figure out and pay for. They are very smart and very unscrupulous men. Too bad they will never be brought to justice for stealing most of the savings of the nation.
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