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Touching a Liberal Third Rail. The Trump administration rightly proposes to fix the Community Reinvestment Act and its damaging legacy.
City Journal ^ | January 17, 2020 | Howard Husock

Posted on 01/20/2020 9:08:01 AM PST by karpov

The Trump administration is under fire for daring to touch a third rail of liberal financial regulation: the 1978 Community Reinvestment Act, or CRA. The proposed new regulations would affect 70 percent of banks by replacing requirements that bank lending target specific geographies or borrowers, such as low-income minorities. Instead, banks would set total dollar goals for lending to low-income borrowers, with the aim of helping poor communities broadly, rather than focusing on specific neighborhoods.

Some of these loans might have occurred anyway, and critics (which include the Federal Reserve) oppose the idea that banks could get “CRA credit” for them. But the new policy should be welcomed as an improvement for lower-income business and mortgage borrowers. Operating in a far more competitive financial-services industry than the late 1970s, lenders will better serve poor neighborhoods by treating them no differently than more affluent areas.

The CRA has become a liberal icon—and a conservative bête noire, cast as a partial accessory to the 2008 financial crisis, on the view that pressuring banks to make loans based on borrowers’ location, rather than on their creditworthiness, leads to poor underwriting practices. Regardless of how one sees the CRA’s history, the Trump administration is right to revise the law; it would be right to repeal it, too, though repeal is unlikely.

The CRA doubtless pushes banks to allocate capital in unconventional ways. For groups like the National Community Reinvestment Coalition, a defender of the law, that’s exactly the point. In their eyes, low-income minority areas are “underserved” by lenders. The New York Times echoes that view. “Banks don’t like lending in lower-income neighborhoods,” its editorial board declared, “even as they profit from deposits taken from those same communities.” Many neighborhoods, the paper continued, are “credit deserts.”

(Excerpt) Read more at city-journal.org ...


TOPICS: Business/Economy; Culture/Society
KEYWORDS: acorn; cra; housing
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1 posted on 01/20/2020 9:08:01 AM PST by karpov
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To: karpov
“underserved” by lenders

It's not that they are “underserved” by lenders. It's that a lot of the prospective loans are "undeserved" due to credit history and past performance.

2 posted on 01/20/2020 9:12:21 AM PST by 17th Miss Regt
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To: karpov

Note on the Community Reinvestment Act: Every year the FFIEC releases bank lending information that the banks are supposed to use to help determine if they are in compliance. We are in the fourth year of Trump, and those crazies are proposing an exponentially more complex set of data and regulation that will add little to the objectives to the act, but much to bank headaches. The folly of this is demonstrated by the fact that the FFIEC was FIVE MONTHS late in releasing the 2018 data this year (late December instead of middle of July) while the banks only have three months to compile it.


3 posted on 01/20/2020 9:13:43 AM PST by Dr. Sivana (There is no salvation in politics)
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To: karpov

Anything to soften that monster of a law is good.

We of course don’t want discrimination based on race, but that is already illegal.


4 posted on 01/20/2020 9:14:28 AM PST by 9YearLurker
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To: karpov

If anyone can demolish that horrendous thing it’s just our awesome President, Donald J . Trump


5 posted on 01/20/2020 9:23:00 AM PST by FrdmLvr (They never thought she would lose.)
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To: karpov

If anyone can demolish that horrendous thing it’s just our awesome President, Donald J . Trump


6 posted on 01/20/2020 9:23:02 AM PST by FrdmLvr (They never thought she would lose.)
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To: 17th Miss Regt
Many neighborhoods, the paper continued, are “credit deserts.”

They are credit deserts for exactly the same reason they are food deserts. Big volume grocers like Kroger, Sav-a-Lot, Aldi's and Wal-Mart won't put up stores in these neighborhoods because the loss from stealing is just too high to make even a modest profit. Likewise, bigger banks won't put up branches for the same reason.

These leaves any service they get at all to smaller, higher margin grocers or payday lender type places which can survive in such a dangerous environment. It is NOT rocket science.

7 posted on 01/20/2020 9:25:30 AM PST by Vigilanteman (The politicized state destroys aspects of civil society, human kindness and private charity.)
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To: 17th Miss Regt

It’s not good to lend money to people who have know visible means of paying it back. Not good for the lenders; not good for the borrowers.


8 posted on 01/20/2020 9:27:32 AM PST by Mr Ramsbotham ("God is a spirit, and man His means of walking on the earth.")
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To: karpov

The CRA was nothing more than a revolving piggy bank for Dems.................


9 posted on 01/20/2020 9:31:44 AM PST by Red Badger (Against stupidity the gods themselves contend in vain.......... ..)
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To: karpov

From time to time it’s important to drop El Trumpo a brief note.

https://www.whitehouse.gov/contact/


10 posted on 01/20/2020 9:33:10 AM PST by rrrod
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To: rrrod

I sent a not last week and received a lovely letter back from White House!!!


11 posted on 01/20/2020 9:36:26 AM PST by Trump Girl Kit Cat (Yosemite Sam raising hell)
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To: Trump Girl Kit Cat

Not = note SORRY


12 posted on 01/20/2020 9:37:00 AM PST by Trump Girl Kit Cat (Yosemite Sam raising hell)
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To: karpov

[they profit from deposits taken from those same communities.]


What deposits? I’m gonna bet that the deposit numbers are so low, they’d close the branches down if the CRA did not exist.


13 posted on 01/20/2020 9:40:20 AM PST by Zhang Fei (My dad had a Delta 88. That was a car. It was like driving your living room.)
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To: Mr Ramsbotham

know?


14 posted on 01/20/2020 9:51:36 AM PST by immadashell (Save Innocent Lives - ban gun free zones)
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To: karpov
The CRA has become a liberal icon—and a conservative bête noire, cast as a partial accessory to the 2008 financial crisis, on the view that pressuring banks to make loans based on borrowers’ location, rather than on their creditworthiness, leads to poor underwriting practices.

Loans should be based on the exact same standards of credit worthiness - across the board... To do otherwise invites disasters like the housing collapse that happened a few years back...

15 posted on 01/20/2020 10:57:41 AM PST by GOPJ (Will MSNBC bimbos go moist talking to Lev Parnas like they did with Michael Avenatti?)
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To: Red Badger
The CRA was nothing more than a revolving piggy bank for Dems...

Bingo

16 posted on 01/20/2020 11:00:00 AM PST by GOPJ (Will MSNBC bimbos go moist talking to Lev Parnas like they did with Michael Avenatti?)
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To: immadashell

Indubitably.


17 posted on 01/20/2020 11:00:40 AM PST by Mr Ramsbotham ("God is a spirit, and man His means of walking on the earth.")
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To: karpov
cast as a partial accessory to the 2008 financial crisis, on the view that pressuring banks to make loans based on borrowers’ location, rather than on their creditworthiness, leads to poor underwriting practice

No poop, Sherlock.

18 posted on 01/20/2020 11:11:15 AM PST by RightGeek (FUBO and the donkey you rode in on)
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To: 17th Miss Regt

“underserved” by lenders

It’s not that they are “underserved” by lenders. It’s that a lot of the prospective loans are “undeserved” due to credit history and past performance.
********
Banks are not stupid. And they are not run by the stereotypically racist type of southerner that inhabited the old south. Modern banks are well aware that they would be shafting themselves by favoring whites with higher credit risk than blacks.


19 posted on 01/20/2020 12:13:22 PM PST by Socon-Econ (adical Islam,)
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To: karpov

It’s been while, but rehashing the CRA —

The CRA program/office was created by Carter, and later intentionally exploded under Bill Clinton, who tasked certain key lawyers (including a lead lawyer named *B H O bama*).

With the White House also pressuring and manipulated the media and court, Obama and legal team won the key lawsuit, which forced the nation’s largest banks to change lending policy.

Banks were to remove lending restrictions specifically from minority applicants, regardless of score. Banks had to knowingly make housing loans available across the country, to people who would never pay them back, and in some cases, never intended to pay them back.

The case was strategically built around one of Clintons specialty’s, the targeted weaponization of civil rights (race). On Clintons que, the mass media and press painted banks and lenders as racist, which intentionally excluded loans based on race.

The banks were trashed by mass media and press.

Obama and his legal team were dependant on the “full court press” triggered and applied by the Clinton White Hut.

And PRESTO!

Now banks had to scale go total “sub-prime”!

There were other factors, but this was a key “biggly” reason for the precipitous mortgage meltdown which really broke the economy, which was then blamed on Bush and Republicans.

Ironic isn’t it (NOT). Clinton’s own “CRA Obama” would in 2007, get to blame and absolutely trash Bush for the economic destruction of his own hard fought handiwork!

Obama then goes on to play “messiah”, hand out obama-phones, and finish Clinton’s 30 year IC/DOD/DOJ/FBI/TREASURY/OMB purges of as many Patriots as possible.


20 posted on 01/20/2020 12:58:34 PM PST by patriotfury ((May the fleas of a thousand camels occupy mo' ham mads tents!))
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