Posted on 09/20/2008 8:44:45 PM PDT by Lusis
The idea started on the outer precincts of the right. Thomas DiLorenzo, an economist who calls Ron Paul "the Jefferson of our time," wrote in September that the housing crisis is "the direct result of thirty years of government policy that has forced banks to make bad loans to un-creditworthy borrowers." The policy DiLorenzo decries is the 1977 Community Reinvestment Act, which requires banks to lend throughout the communities they serve.
The Blame-CRA theme bounced around the right-wing Freerepublic.com. In January it figured in a Washington Times column. In February, a Cato Institute affiliate named Stan Liebowitz picked up the critique in a New York Post op-ed headlined "The Real Scandal: How the Feds Invented the Mortgage Mess." On The National Review's blog, The Corner, John Derbyshire channeled Liebowitz: "The folk losing their homes? are victims not of 'predatory lenders,' but of government-sponsored -- in fact government-mandated -- political correctness."
(Excerpt) Read more at prospect.org ...
The CRA was bad enough, but until about 1999, things weren’t too bad. It was Clinton’s revisitation around that time that started the problems.
If we returned to 1999 lending standards I think we’d be fine (once all the other problems shake out.)
It’s very simple - if you are going to mandate lenders loan to people who statistically won’t be able to repay, you also better mandate that they can’t go out of business.
Wait, they’ve done that too.
In an earlier post on this general subject, you’re damn right they did. But both the banks and Congress are to blame for the mess.
This is the privatized ghetto failing. Not enough blacks getting home loans ‘cuz they cannot qualify. Congress pressure by groups saying this is disguised racism. Congress forces banks to make loans to high risk individuals else face penalties and the racist smear.
Where banks went wrong is that some became extremely leveraged in these mortgages and crapped out when the housing market fell out. Banks wound up getting greedy.
But liberals in Congress, and Clinton, are where the pressure to make these loans to people who never should have gotten them, originated.
“Liberal Intelligence?” That’s the Mother of All Oxymorons.
The CRA is only one piece of it, albeit an important piece.
The massive effort by the political masters of Fannie and Freddie to channel hundreds of billions of dollars of loans to unqualified borrowers was a huge part of it.
Looks like the game plan by the Rats is to characterize criticism of the liberals as being only the CRA effect, and then to try to spin that down.
Ain’t gonna hunt.
“Thoughts?”
It’s mostly bull. The marketers of loans, refis, all sorts of instruments didn’t need the CRA to think up pushing loans on everyone. All that was needed was the payoff for the broker and the confidence someone else would take over the loan. Then they were securitized, traded, etc. with another layer of confidence, the “implied” promise of Government backing.
More, the crisis is in property value declines throughout the nation, undermining the value of the paper that was sold around the world. It is not about illegal aliens and poor blacks getting loans, which is the racist knee jerk response.
“to channel hundreds of billions of dollars of loans to unqualified borrowers was a huge part of it.”
And a big part of that is that most borrowers were qualified at the time using normal sense.
This bill was written by Phil Gramm, blame clitoon for what clitoon did. Blame the republicans for what they did. It is posted all over this forum.
This bill was written by Phil Gramm, blame clitoon for what clitoon did. Blame the republicans for what they did. It is posted all over this forum.
The author is missing the entire point. The federal government should never have been in the place of insuring the mortgage lending industry to begin with, much less in the business itself. Also, the law encouraged these companies to push said risky loans. When you have government involved, corruption follows. The Democrats were involved in the corruption up to their eyebrows.
Profit, by the way, at least legal profit is not a bad word. The guy must be a socialist.
“Did Liberals Cause the Sub-Prime Crisis?”
Yes
And the killing of important parts of the Glass-Steagall Act,
Sounds like you’re reading too much liberal propaganda. Yeah, they’re trying to hang it on the Republicans for “deregulating” the mortgage industry. The Republicans did not set up the CRA.
http://intrepidliberaljournal.blogspot.com/2008/06/john-mccains-friend-phil-gramm.html
No they did not set it up! they agreed to add it to the Gramm-Leach-Bliley Financial Services Modernization Act, this deregulation from a law passed during the depression allowed banks to get into securities, insurance and investments services banking, etc. and greed did the rest.
Yup. The greedy liberals did the rest:
NYT 1999: Fannie Mae Eases Credit To Aid Mortgage Lending [to minorities and uncreditworthy]
http://www.freerepublic.com/focus/f-news/2086781/posts
You have an incomplete historical perspective. Although I agree with you that the CRA wasn’t and isn’t the single cause of the meltdown, it was the weed seed in the field.
Then came the savings and loan deregulation that destroyed community-based mortgage markets, the environment that the original CRA was designed to work within.
Then came Clinton’s dose of adrenaline into the CRA regulations that turned a noble goal into a frenzied rush to make bad loans in order to avoid draconian penalties. Besides, there was an implicit promise that if lenders made these government mandated loans to the Democrat mascot class, they would be protected.
The outcome should have been predictable, and it WAS predicted, at least as long ago as 2000.
Sure, all sorts of shady practices have acted to exacerbate the problem, but as sure as God made little green apples, Democrats and the CRA were the genesis of the shole thing.
And mind you, I’ve said nothing of the revolving door and sleazy kickbacks that existed between congressional Democrats and Fannie and Freddie.
It’s pretty disgusting, and what’s even more disgusting is the facility that the guilty are able to find enablers in the media to try to cast the blame off to others - even to the very ones who have been trying to fix the problem over the years.
It started with FDR and it continued with every moron who declared him a saint (or the second coming) and deemed his policies untouchable.
This is what happens when you elect socialis...er, “Democrats” and let them make their ideas law.
But they weren't all Democrats. There are plenty of liberal Republicans involved.
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