Clinton administration's responsibility for the current subprime criss

[whitedog57]

I need the help of my fellow Freep researchers.

Much of the subprime crisis is the result of the Clinton administration pushing the Fed and lending institutions into expanding mortgages into ultra high LTV loans to households with low credit (FICO) scores. Furthermore, they pushed for the low doc/no doc loans.

Can ANYONE find a VERIFIABLE story or the original documents showing that the Clinton administration had a hand into today's subprime crisis.

[jwparkerjr]

Well, notwithstanding any of the bills that might have passed or pressure applied by one administration or another, there’s something about this whole mess that stinks to High Heaven. Something changed, or we would have had this problem years earlier.

Sadly the very people who it normally be expected the sniff out the root of the problem, investigative reporters, will drop whatever investigative efforts they are making as soon as the trail extends back beyond Jan. 2001. Look at the handling by the investigative reporting gang on 9/11.

I am not convinced the sub-prime ‘crisis’ is all that big, but I don’t have the financial background to weigh the various factors and decide where the responsibility lies for certain.

I think there was financial problems coming down the pike with or without the sub-prime mess. Looks to me like the powers that be were setting us up to be sold the idea that it has been Bush’s mishandling of energy costs that caused the problem.

There have been, and will be, a series of bad financial decisions and policies coming along, any one of which has the potential to be the ‘big’ one that brings about recession or worse. Once we are in the throes of financial agony the last thing we compulsed over, in this case the sub-prime situation, will get the full blame.

There’s nothing wrong with the economy today that couldn’t have been minimized or averted completely by good conservative government at every level from homeowner’s associations all the way to the White House. That has simply not been the case and we’re about to pay the piper. And when the pipe finally decides to collect it’s always worse than when those doing the dance pay as the go!

[Ernest_at_the_Beach]

Turned this up:

Inner City Press Bank Beat
Archive # 4: Oct. - Dec. 31, 1999

**************************EXCERPT**************************

December 27, 1999

   In this holiday-week edition of Bank Beat, Inner City Press reviews two pending merger applications (Telebank - E*TRADE and two North Fork Bank applications), then a broader M&A review.

Telebank Maintains Evasive CRA Position --
Will the OTS Accept It?

     On December 23, 1999, a representative of Inner City Press participated in a conference call with the Office of Thrift Supervision and three officials of Telebank, including its CEO Mitch Caplan. During the hour-long call, Mr. Caplan reiterated Telebank’s position that it is only subject to the Community Reinvestment Act in Arlington, Virginia (where Telebank’s headquarters office is located), despite the bank’s solicitation of deposits nationwide. Mr. Caplan stated that Telebank “does not make loans,” explaining that making loans is expensive. Mr. Caplan emphasized Telebank’s November 20, 1999, commitment to increase the percentage of its assets that are “CRA loans” from the current 5% to 10%, stating that this is a significant commitment, since “CRA loans are less profitable.”

    Inner City Press has submitted comments to the OTS opposing the proposed Telebank - E*TRADE merger, on CRA and other grounds. ICP timely requested an informal meeting on the application. The OTS representatives on the call, however, began by stating their position that the OTS’ informal meeting rules don’t apply to the E*TRADE - Telebank application, but that the OTS was nevertheless offering this conference call. ICP maintains that an informal meeting is required, but thanked the OTS for holding the conference call (which was set up on short notice -- the OTS left a message for ICP on Dec. 21 proposing such a call, and attempted to set the call for the next day, Dec. 22).

    One might infer, from the timing, that the OTS is considering imminently approving the E*TRADE - Telebank application. In fact, Mr. Caplan during the call referred to other meetings he has had with OTS officials about the bank’s CRA program, without notice to, or the participation of, ICP. The implication was that the OTS has already agreed to Telebank’s plan of 10% of assets devoted to “CRA,” and a $1 million program with the Boys & Girls Club. ICP encouraged Telebank (and the OTS) to compare Telebank’s proposals to the announced programs of other large brick-and-mortar banks. For a bank with $4 billion in assets to make so much of a $1 million plan calls for such a comparison.

    More fundamentally, ICP urged Telebank and the OTS to compute and disclose what percentage of Telebank’s current 100,000 depositors live in low or moderate income census tracts, and similar demographics for the people who apply for and obtain mortgage credit through Telebank. Mr. Caplan claimed to not have such data, and the OTS said nothing on the topic.

    The conference call was civil, but raises the question of whether the OTS is now rushing to approve the E*TRADE - Telebank application, giving in to the banks’ self-imposed deadline for closing the deal. If the OTS had already agreed to Telebank’s CRA proposal, what was the purpose of the call? This is a mystery that, in all probability, will soon be clarified.

* * *

North Fork Bank Has Stopped Government-Sponsored Mortgage Lending --
What Will the Fed (and FDIC) Do About It?

    The Federal Reserve Board has asked North Fork Bank, as part of North Fork’s protested applications to acquire Reliance and JSB savings banks in New York, to explain any decisions since 1997 “to alter the focus of its lending activities or composition of its loan portfolio.” In a December 15 response, North Fork stated that it “decide[] in 1998 to discontinue originating government sponsored mortgage loans, and the number of such loans declined.”

    The Fed on Dec. 20 asked two follow-up questions: “Please discuss whether North Fork has eliminated its participating in all state and federally sponsored affordable mortgage programs,” and “Please describe any affordable mortgage lending programs in place at Jamaica Savings Bank or Reliance Federal Savings Bank that will be retained or adopted for use by North Fork Bank.” To this last, North Fork responded that “neither Jamaica Savings Bank nor Reliance Federal Savings Bank offer affordable mortgage lending programs.”

     On Dec. 16, JSB Financial announced it was moving back its shareholders’ meeting on North Fork’s bid from Jan. 13 to February 10, 2000. “JSB did not give a reason for the data change.” Reuters, Dec. 16.

* * *

[CPT Clay]

Bump

[doodad]

Not sure, but I distinctly remember the Reno JD warning banks here in Atlanta about redlining and how they would come down on them if they found they were not lending to everyone and every area.

[Ernest_at_the_Beach]

Wikipedia:

Community Reinvestment Act

***********************EXCERPT***************************

The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law that requires banks and thrifts to offer credit throughout their entire market area and prohibits them from targeting only wealthier neighborhoods with their services, a practice known as "redlining." The purpose of the CRA is to provide credit, including home ownership opportunities to underserved populations and commercial loans to small businesses.

The CRA was passed into law by the U.S. Congress in 1977 as a result of national grassroots pressure for affordable housing, and despite considerable opposition from the mainstream banking community. Only one banker, Ron Grzywinski from ShoreBank in Chicago, testified in favor of the act. [1]

The CRA mandates that each banking institution be evaluated to determine if it has met the credit needs of its entire community. That record is taken into account when the federal government considers an institution's application for deposit facilities, including mergers and acquisitions. The CRA is enforced by the financial regulators (FDIC, OCC, OTS, and FRB). In 1995, as a result of interest from President Clinton's administration, the implementing regulations for the CRA were strengthened by focusing the financial regulators' attention on institutions' performance in helping to meet community credit needs. These changes were very controversial and as a result, the regulators agreed to revisit the rule after it had been fully implemented for five years. Thus in 2002, the regulators opened up the regulation for review and potential revision.

[Ernest_at_the_Beach]

From the Wkipedia article just above:

In 1995, as a result of interest from President Clinton's administration, the implementing regulations for the CRA were strengthened by focusing the financial regulators' attention on institutions' performance in helping to meet community credit needs.

[Ernest_at_the_Beach]

See #25 and #26...

[Ernest_at_the_Beach]

See #25 and #26.

[Ernest_at_the_Beach]

See #25 and #26.

[napscoordinator]

No it was not and besides did people have trouble paying for morgages before a year ago? Some but not like we are seeing. You can blame Clinton for a lot of things but not this. Stop being like the Democrats when they blame Bush for everything it just makes us look stupid.

[jwparkerjr]

Looks to me like the usual suspect, that being the Federal Government! When you’ve had banks doing business in a particular manner, based on over a hundred years of avoiding losses, and then you suddenly force them to abandon their rules and go with rules formulated by those with distinctly different goals the end can’t be to far away!

Lots and lots of chickens coming home to roost!

[Trailerpark Badass]

This is a recent post of mine

Please keep in mind, I'm only asking questions here; I know little about the mortgage or banking industry and its recent history.

[Ernest_at_the_Beach]

The Socialists in the House of Representatives will hold an investigation...being careful as to whom they call....

[Trailerpark Badass]

Here's another article.

[Tarpon]

Now you know why your house value went through the floor...

Government caused recession and devaluation of the most important asset most people own. I wonder how people think the fascism of Hillary will be better?

[HardStarboard]

I found this gem in a list of Bill Clinton's accomplishments. (a very scary exercise when you look at the number of places he inserted government into the economy)!

The President has also signed the Community Development Banking Bill to create community banks in low- and moderate-income communities. He made permanent the Low-Income Housing Tax Credit and Mortgage Revenue Bond Program.

Those two programs would be a good place to start.

http://en.wikipedia.org/wiki/Low-Income_Housing_Tax_Credit

http://en.wikipedia.org/wiki/Mortgage_revenue_bond_loan

Also found this cruising around:

Remarks announcing the community development banking and finance initiative - Pres Bill Clinton - Jul 15, 1993 - Transcript

http://findarticles.com/p/articles/mi_m2889/is_n28_v29/ai_14234794

Please ping me on any results you come up with. good luck.

[buckalfa]

Agreed,

Bank deregulation starting back in the 80’s loosend the rules for real estate lending and allowed other types of instituitons to enter the market. Add new regulations in the name of social engineering, coupled with greed, and you get the sub prime mess we are in today. Both political parties get equal share of the blame in my opinion.

[doodad]

Righto, but I remember the city here planning to sic the JD on lenders and remove their ability to bid on city financing if they did not comply. I remember thinking at the time, still a poor young man who could not afford a home yet, that it was a stupid idea.

[Ernest_at_the_Beach]

And an official source:

US Dept of Housing
Sec. 5304.* statement of activities and review
[* section 104 of the act]

***************************EXCERPTS*******************************

From the U.S. Code
[Laws in effect as of January 20, 1999]
[CITE: 42USC5304]

1. Statement of objectives and projected use of funds by grantee prerequisite to receipt of grant; publication of proposals by grantees; notice and comment; citizen participation plan
   1. Prior to the receipt in any fiscal year of a grant under section 5306(b) of this title by any metropolitan city or urban county, under section 5306(d) of this title by any State, or under section 5306(d)(2)(B) of this title by any unit of general local government, the grantee shall have prepared a final statement of community development objectives and projected use of funds and shall have provided the Secretary with the certifications required in subsection (b) of this section and, where appropriate, subsection (c) of this section. In the case of metropolitan cities and urban counties receiving grants pursuant to section 5306(b) of this title and in the case of units of general local government receiving grants pursuant to section 5306(d)(2)(B) of this title, the statement of projected use of funds shall consist of proposed community development activities. In the case of States receiving grants pursuant to section 5306(d) of this title, the statement of projected use of funds shall consist of the method by which the states will distribute funds to units of general local government.
      
      
   2. In order to permit public examination and appraisal of such statements, to enhance the public accountability of grantees, and to facilitate coordination of activities with different levels of government, the grantee shall in a timely manner--
      1. furnish citizens or, as appropriate, units of general local government information concerning the amount of funds available for proposed community development and housing activities and the range of activities that may be undertaken, including the estimated amount proposed to be used for activities that will benefit persons of low and moderate income and the plans of the grantee for minimizing displacement of persons as a result of activities assisted with such funds and to assist persons actually displaced as a result of such activities;
         
         
      2. publish a proposed statement in such manner to afford affected citizens or, as appropriate, units of general local government an opportunity to examine its content and to submit comments on the proposed statement and on the community development performance of the grantee;
         
         
      3. hold one or more public hearings to obtain the views of citizens on community development and housing needs;
         
         
      4. provide citizens or, as appropriate, units of general local government with reasonable access to records regarding the past use of funds received under section 5306 of this title by the grantee; and
         
         
      5. provide citizens or, as appropriate, units of general local government with reasonable notice of, and opportunity to comment on, any substantial change proposed to be made in the use of funds received under section 5306 of this title from one eligible activity to another or in the method of distribution of such funds.
         
         In preparing the final statement, the grantee shall consider any such comments and views and may, if deemed appropriate by the grantee, modify the proposed statement. The final statement shall be made available to the public, and a copy shall be furnished to the Secretary together with the certifications required under subsection (b) of this section and, where appropriate, subsection (c) of this section. Any final statement of activities may be modified or amended from time to time by the grantee in accordance with the same procedures required in this paragraph for the preparation and submission of such statement.

3. A grant under section 5306 of this title may be made only if the grantee certifies that it is following a detailed citizen participation plan which--
   1. provides for and encourages citizen participation, with particular emphasis on participation by persons of low and moderate income who are residents of slum and blight areas and of areas in which section 106 [42 U.S.C. 5306] funds are proposed to be used, and in the case of a grantee described in section 5306(a) of this title, provides for participation of residents in low and moderate income neighborhoods as defined by the local jurisdiction;
      
      
   2. provides citizens with reasonable and timely access to local meetings, information, and records relating to the grantee's proposed use of funds, as required by regulations of the Secretary, and relating to the actual use of funds under this chapter;
      
      
   3. provides for technical assistance to groups representative of persons of low and moderate income that request such assistance in developing proposals with the level and type of assistance to be determined by the grantee;
      
      
   4. provides for public hearings to obtain citizen views and to respond to proposals and questions at all stages of the community development program, including at least the development of needs, the review of proposed activities, and review of program performance, which hearings shall be held after adequate notice, at times and locations convenient to potential or actual beneficiaries, and with accommodation for the handicapped;
      
      
   5. provides for a timely written answer to written complaints and grievances, within 15 working days where practicable; and
      
      
   6. identifies how the needs of non-English speaking residents will be met in the case of public hearings where a significant number of non-English speaking residents can be reasonably expected to participate.
      
      

This paragraph may not be construed to restrict the responsibility or authority of the grantee for the development and execution of itscommunity development program.

2. Certification of enumerated criteria by grantee to Secretary
   
   

   ***********************************************************

   Pure Bureau...........STUFF******************************

[Ernest_at_the_Beach]

See #39....