I hate to be the devil’s advocate, but I don’t see where the CRA had much to do with this at all.
There’s a couple of reasons:
First, the CRA did not force anyone to make dangerous loans. In fact, the original act specifies that it should “be consistent with the safe and sound operation of such institutions”.
http://www.fdic.gov/regulations/laws/rules/6500-2515.html
There were never any monetary penalties if an institution did not comply with the CRA, it only affected applications for new facilities and preferable treatment on inter bank loans, even after Clinton’s 1999 revisions.
Also, I can’t find that low income loans are the majority of the failures. Everything I see points points to middle and upper middle class foreclosures being the problem.
http://online.wsj.com/public/resources/documents/retro-MORTGAGE0807.html
If I’m wrong, I would appreciate some links to applicable mortgage information, or actual penalties levied on institutions for not fulfilling the requirements of CRA.
Thanks.
p.s. I’m off to a service call, be back in a couple of hours.
“First, the CRA did not force anyone to make dangerous loans. In fact, the original act specifies that it should “be consistent with the safe and sound operation of such institutions”.”
There were extreme subtile pressures and minority reports that created a dilemma for the lenders. You had to meet quota.
First, the CRA did not force anyone to make dangerous loans. In fact, the original act specifies that it should “be consistent with the safe and sound operation of such institutions”.
The problem started in 1989 with Home Mortgage Disclosure Act. Banks were forced to collect racial data on mortgage applicants. Then came the 1995 Clinton modifications to the CRA.
There were never any monetary penalties if an institution did not comply with the CRA, it only affected applications for new facilities and preferable treatment on inter bank loans, even after Clinton’s 1999 revisions.
Private plaintiffs and the Justice Department brought suits against lending institutions. "Patterns of Discrimination" were charged.
See this.
Also, I can’t find that low income loans are the majority of the failures. Everything I see points points to middle and upper middle class foreclosures being the problem.
You'll have to explain how you come to the conclusion that middle and upper middle class foreclosures are the problem.
Oh no ... I wasn’t referring to the credit reporting agencies in regard to the financial bailing.
Just mentioned in passing, although her bank, Superior Bank, went under, she took millions, cost us (FDIC) millions, was fined millions, and contributed to the fall of Bear Sterns, due to their sub prime lending.