Posted on 09/16/2008 6:52:59 PM PDT by Riflema
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.
(Excerpt) Read more at city-journal.org ...
This article illustrates brilliantly how political interference in the mortgage industry, under the guise of the CRA, led to lenders falling over themselves to make reckless loans to "borrowers" who had no prospect of paying them off. Well, I wonder how that turned out?/s
In my mind this begs a question that maybe some Freepers with greater insider knowledge of the mortgage or mortgage wholesaling business might know: did HUD, and/or Fannie and Freddie actually condone disguising the nature of the loans that these lenders were forced into? Were the prospectuses for such loan packages/ABS bond issues legally doctored to conceal the toxic nature of these mortgages? Or did Fannie and Freddie just assist in stirring this junk in with the other normal loans that got packaged under their good names?
Thank you for posting this.
I lived through it as part of the industry.
Somebody needs to lay the blame where the blame is.
Thanks for posting this. Very prescient.
Nice find. Bookmark for later.
So why didn’t people jump up and down about this long ago . . .before the situation got out of hand?
MEGA PING!! Where is Eliot Ness? Calling all remaining responsible citizens!
ping for later
Such as Barack Obama's ACORN "Community Organizing" group!!!
It is scaring the (bleep) outa me that this militant group with this militant activist/agitator alumnus is getting anywhere near the most powerful postion on earth!!!
I'm going to go out on a limb and speculate that too many people at too many levels were making too much money off it. Who would of thought that the real estate market would ever take a dive and reveal all this nonsense? /s
I don’t think it was disguised. I think banks were made to feel more comfortable originating and selling these loans. They probably thought that since the govt wanted them to do these loans, what could possible go wrong down the road. I have been in the business for 9 years and I have been telling people that our problems today can be dated back to the late 90’s when all the programs came out that were very easy to qualify for. I know the bank I used to work for did several loans based on their CRA value and not their credit worthiness. You reap what you sow.
I don’t think it was disguised. I think banks were made to feel more comfortable originating and selling these loans. They probably thought that since the govt wanted them to do these loans, what could possible go wrong down the road. I have been in the business for 9 years and I have been telling people that our problems today can be dated back to the late 90’s when all the programs came out that were very easy to qualify for. I know the bank I used to work for did several loans based on their CRA value and not their credit worthiness. You reap what you sow.
I don’t think it was disguised. I think banks were made to feel more comfortable originating and selling these loans. They probably thought that since the govt wanted them to do these loans, what could possible go wrong down the road. I have been in the business for 9 years and I have been telling people that our problems today can be dated back to the late 90’s when all the programs came out that were very easy to qualify for. I know the bank I used to work for did several loans based on their CRA value and not their credit worthiness. You reap what you sow.
Community Organizers? Thanks but no thanks.
Bill Clinton, the rats John F Kennedy, thank you!you have given us the gift that keeps on giving. The middle class that you and now obama swear were going to help in these hard times have given us the BILL to pay on these reckless financial scams that made you and a lot of other rats big money at the middleclass expense.
NOW OBAMA IS MAKING THE SAME CLAIM, HE WILL HELP THE MIDDLE CLASS. dejvu? Fool me once shame on you fool me twice shame on me!
ping
Thank Goodness we got a Republican administration in place in time to avert any problems.
The Clintons planned on using a cut of the take to finance their political empire. Then 0bama came along and usurped it from them.
Well, hillary, can’t you appreciate the bitter irony of it all?
mark for AM coffee
Agreed. The government let it be known that it was, essentially, cool to lend where other feared to tread and so everyone piled on. My question is: how did the cooler heads in the investment community get hoodwinked?. Did Fitch, Moodys, S&P really fall asleep at the switch when they rated this junk AAA? Or did the principal issuers of this junk, Fannie and Freddie, somehow fudge the facts in the prospectuses? Call me naive, but I still can’t understand how so much garbage got sold so readily to “sophisticated” investors.
Yet another liberal fantasy run amok — leaving a mess for the adults to clean up.
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