Democrats on path to repeat housing disaster

[Roscoe]

Democrats on path to repeat housing disaster
By: Byron York
Chief Political Correspondent
September 22, 2009
(Photos.com)

With all the attention paid to the health care battle, ACORN, and the president's "Full Ginsburg" appearances on five Sunday talk shows, few people noticed a hearing with an exceedingly boring title -- "Proposals to Enhance the Community Reinvestment Act" -- held last week in the House Financial Services Committee. But the session marked a key moment in the ongoing battle between Republicans and Democrats over what caused our current financial woes -- and how we might best avoid getting into the same trouble again.

At the hearing, and in others across Capitol Hill, Democratic majorities are pressing hard to expand some of the very policies that led to the reckless home lending that in turn helped lead to the great financial meltdown. If Chairman Barney Frank and his fellow Democrats have their way, we'll do it all again -- and more.

At issue last week was H.R. 1479, the Community Reinvestment Modernization Act of 2009, sponsored by Democratic Rep. Eddie Bernice Johnson. It would expand and strengthen the 1977 Community Reinvestment Act, which required banks to make loans in low-income areas that many lenders had traditionally shunned.

http://www.washingtonexaminer.com/po...-60060902.html

[Excaliber]

I recently sold my house and was surprised at what the buyer had to go through to get loan approval. That is the buyer who eventually bought it, as several other's had to drop out because loan approval process was just taking to long! It's tough to qualify these days for plenty good folks with good jobs.

But I'm not sure how much blame is warranted for our current dabacle on low income housing loans. Heck the banks were loaning money like crazy to ANYBODY with a warm body. I suspect the BULK of the problem had to do with how those loans, good and bad, were bundled, sold and insured by Wall St. THAT I believe is the fundamental issue. Because of that "easy money" for the bank to sell/transfer the loans to ready and willing investor groups they became lax in applying more stringent accounting methods to making loans in the first place. Why bother? Someone IS going to buy the loan anyway, let them deal with the risk.

[Dan40]

Originally Posted by Excaliber

I recently sold my house and was surprised at what the buyer had to go through to get loan approval. That is the buyer who eventually bought it, as several other's had to drop out because loan approval process was just taking to long! It's tough to qualify these days for plenty good folks with good jobs.

But I'm not sure how much blame is warranted for our current dabacle on low income housing loans. Heck the banks were loaning money like crazy to ANYBODY with a warm body. I suspect the BULK of the problem had to do with how those loans, good and bad, were bundled, sold and insured by Wall St. THAT I believe is the fundamental issue. Because of that "easy money" for the bank to sell/transfer the loans to ready and willing investor groups they became lax in applying more stringent accounting methods to making loans in the first place. Why bother? Someone IS going to buy the loan anyway, let them deal with the risk.

ALL of the present debacle can be laid at the feet of both parties. The Community Reinvestment Act was passed 40+ years ago to stop "RED LINING" There have been numerous changes [STRENGTHENING] of the CRA since then. When passed it did nothing but make the banks spend the money to check employment and credit history and have the property appraised before REJECTING the loan. Rejecting the loan NOT because the banks wanted to reject the loan but because it would have been a worthless loan ending in default. And both Federal and State banking regulations did not allow banks to make such loans. Regulations also required that banks have only very highly rated paper, no high risk ventures allowed by law. Over the years, both parties, added teeth to the CRA while REPEALING a wide variety of banking regulations DESIGNED TO PREVENT OUR PRESENT SITUATION. All of the under the GUISE that poor people have the right to own a house too. THEY HAVE NO SUCH RIGHT! They have the right to an opportunity to make enough money to buy and pay for a house of their own. The real reason, both parties, RUINED banking regulations, was to BUY the votes of the poor. Have the poor benefited from the manipulations of the politicians of both parties? Not a penny. Adjusted for inflation, they likely have 50% less than they did 40 years ago when they were red lined against.
Since 1960, the Government, to the SHAME of both parties has GIVEN over TEN TRILLION DOLLARS to "the poor." And they seem surprised that "the poor" seems to be a growth industry.

[cobra bill]

The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound operations. It was enacted by the Congress in 1977 (12 U.S.C. 2901) and is implemented by Regulation BB (12 CFR 228). The regulation was substantially revised in May 1995, and was most recently amended in August 2005.
Evaluation of CRA Performance
The CRA requires that each depository institution's record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution's application for deposit facilities.

Neither the CRA nor its implementing regulation gives specific criteria for rating the performance of depository institutions. Rather, the law indicates that the evaluation process should accommodate an institution's individual circumstances. Nor does the law require institutions to make high-risk loans that jeopardize their safety. To the contrary, the law makes it clear that an institution's CRA activities should be undertaken in a safe and sound manner.

CRA examinations are conducted by the federal agencies that are responsible for supervising depository institutions. Information on this page is related to depository institutions that are examined by the Federal Reserve, mainly state-chartered banks that are members of the Federal Reserve. CRA information on other depository institutions is available from the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS). Interagency information about the CRA is available from the Federal Financial Institutions Examination Council (FFIEC).

[Jamo]

Excellent spelling and grammar...copy and paste?

[Dan40]

Originally Posted by cobra bill

The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound operations. It was enacted by the Congress in 1977 (12 U.S.C. 2901) and is implemented by Regulation BB (12 CFR 228). The regulation was substantially revised in May 1995, and was most recently amended in August 2005.
Evaluation of CRA Performance
The CRA requires that each depository institution's record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution's application for deposit facilities.

Neither the CRA nor its implementing regulation gives specific criteria for rating the performance of depository institutions. Rather, the law indicates that the evaluation process should accommodate an institution's individual circumstances. Nor does the law require institutions to make high-risk loans that jeopardize their safety. To the contrary, the law makes it clear that an institution's CRA activities should be undertaken in a safe and sound manner.

CRA examinations are conducted by the federal agencies that are responsible for supervising depository institutions. Information on this page is related to depository institutions that are examined by the Federal Reserve, mainly state-chartered banks that are members of the Federal Reserve. CRA information on other depository institutions is available from the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS). Interagency information about the CRA is available from the Federal Financial Institutions Examination Council (FFIEC).

Read this:

http://www.federalreserve.gov/newsev...n20080213a.htm

and this:

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

And there is much much more.

Typical is one study saying that NON CRA regulated institutions made the SUB PRIME LOANS.. Saying that ONLY 1 in 4 sub prime loans were made by CRA regulated banks. Like being 25% of the problem is NOT being part of the problem. THAT is the result of the Government's own examination of its own practices.

NET: Politicians of both parties FORCED banks to make loans to people that could not AND would not pay.

[Stentor]

Originally Posted by Jamo

Excellent spelling and grammar...copy and paste?

Ya think, Jamo!? That's a good one.

[Excaliber]

Poor Cobra Bill, no slack under any circumstances. It's a tough crowd...

[CobraEd]

and good speler two !!!!


.

[cobra bill]

The larger problem seems to be the oversight, it seems too many brokers were writing loans that they knew were bad, and no one was watching them. Look at it this way if you were poor and someone was telling you they could get you a loan, do you think they are going to turn them down because they might not qualify? NO, they are going to take that loan, I think the problem was brokers pushing loans that they knew were bad, they also knew they could be bundled and re-sold and would be long gone when the truth came out.

[Dan40]

Originally Posted by cobra bill

The larger problem seems to be the oversight, it seems too many brokers were writing loans that they knew were bad, and no one was watching them. Look at it this way if you were poor and someone was telling you they could get you a loan, do you think they are going to turn them down because they might not qualify? NO, they are going to take that loan, I think the problem was brokers pushing loans that they knew were bad, they also knew they could be bundled and re-sold and would be long gone when the truth came out.

OVERSIGHT? As in enforcement of Government regulations? And
WHO is in charge of enforcement of Government regulations? The Government! And who is in charge of the Government? The Politicians!
So if oversight is NOT done, it is not done at the direction of the politicians!
I cannot look at things like poor people do, since I'm not poor and do understand what credit and good credit ratings means. The scenario you describe is not of POOR people, it is one of STUPID people. Many of the loans were to people making $80K to $100K a year and buying $600,000 homes at nothing down and at high interest rates. That's STUPID at any income level.

Prior to the CRA, the standing and true joke about bankers was, "If you want a loan from a bank, you have to prove to them that you DO NOT need the money!" Bankers WERE the most conservative of businessmen.
Laws with pure political intent [CRA], repealing of SOUND banking regulations, and the non-enforcement and ignoring of others, led to the housing and financial bust. ALL of which can be laid at the feet of politicians, of both parties, acting in THEIR OWN best interests, not those of the people or the nation. Politicians created the situation where Billions of dollars of 'funny money' were laying on the table. It is no surprise that people with larceny in their hearts replaced the conservative bankers. Build a bank with no locks, no safe, and no guards. IT WILL BE ROBBED--------OFTEN!

[cobra bill]

I agree, it really all depends on who's guarding the hen house, now I'm not saying that only one side is the problem, but, when your party believes that government is the problem and you set forth to prove it by appointing a horse judge to run FEMA, you get Katrina. and the reason for changing what bankers had done in the past is we the tax payers were now insuring there loans, so there had to be something in it for the regular guy. Keep in mind they managed to do this to us before in the great Republican depression, repealing Glass Stiegel was more harmful than anything else, and yes we have to blame Clinton for signing that bill, but who brought it to the floor and got it pushed through? And I guarantee you that no one from the inner cities or the poor were getting loans for a 600,000 home, that was working class people and yes they were stupid. but without the greed of those that would write the loan they would have never gotten a loan to begin with.

[Dan40]

Originally Posted by cobra bill

I agree, it really all depends on who's guarding the hen house, now I'm not saying that only one side is the problem, but, when your party believes that government is the problem and you set forth to prove it by appointing a horse judge to run FEMA, you get Katrina. and the reason for changing what bankers had done in the past is we the tax payers were now insuring there loans, so there had to be something in it for the regular guy. Keep in mind they managed to do this to us before in the great Republican depression, repealing Glass Stiegel was more harmful than anything else, and yes we have to blame Clinton for signing that bill, but who brought it to the floor and got it pushed through? And I guarantee you that no one from the inner cities or the poor were getting loans for a 600,000 home, that was working class people and yes they were stupid. but without the greed of those that would write the loan they would have never gotten a loan to begin with.

What party? I am not a Republican or a Democrat. [Registered Independent] My complaint is about self serving politicians of EITHER party. And it was those self servers that did things like repealing Glass-Steegal, thereby opening the door for the greedy to move into a formerly ultra conservative industry. Crooks are always with us, that is why we have laws and regulations to keep them at a minimum. But when the politicians drop the nations drawers and grab the nations ankles, why are they ALWAYS shocked at the results?

Complaining about obummer does not make me a Repub. He is not responsible for the financial and housing bust any more than any other self serving pol. He is responsible for being an inept and lying president that will accomplish nothing GOOD for this nation. I have never argued with you or any other liberal about Bush being BAD. Hell yes he was BAD! But he IS gone and BHO is a quantum leap worse. BHO"S spending is certifiably INSANE! That WILL be his enduring legacy.

[DAVID GAGNARD]

Just last week my 30 year old niece with 2 kids told me her and her husband are fixin to build a really nice house......I was very surprised to say the least. They live in a big trailer house and are paying a note on that, his new Z-71 and her new SUV.... They live from month to month,hand to mouth.......how can that be, well, seems they have found a lender (she didn't elaborate) that will loan them pretty much what they want with NO MONEY DOWN!!!!!!!!!!!!!!!!!! They will finance the full price of the house!!!!!!!!!!!! not a penny down, nothing-nadda-zilch, thank you very much........

When I married my wife in 1978, my dad had to co-sign a note for a whopping $8,500.00 for us to buy a 900 square foot house and that was only cause he and the bank president were lifelong friends!!!!!!!! He said my loan would never fly by the board of directors cause I was fresh outa school and had NO credit/rating. I understood and dad helped me out with his signature......the way it should have been for me at the time.

My wife and I paid off the loan 3 years early and saved up for a bigger/better house down the line.....Then 10 years later we found a house we wanted and went to the bank, talked to the loan officer and he told us because we now had good credit and were good customers, we ONLY had to put down 20% of the purchase price, we actually put down 50%..............still took 2 weeks for the loan to be approved with a 50% down payment!!!!!!!!!!!!

Now-a-days, seems you just walk in and ask for a basket of money and get it.............I guess I'm ole fashion, cause I just don't get it.....maybe another reason I'm not a banker!!!!!!!!!!!

David

[cobra de capell]

Actually, CRA had little to do with the banking meltdown, other than the fact that CRA brought about the first lowering of lending standards with those standards subsequently put in place at all levels of real estate lending.

With that said, the CRA helped bring the system to its knees. Whether it played the major role or a minor role is beside the point.

[cobra bill]

Dana40,
Point taken, sorry if I may have offended you. and you are right about the self serving politician, and the biggest culprit to blame is corporations, they own all of them, I voted for Obama because he didn't use corporate money to get elected, I as with many other figured we would finally get a politician that we the people paid to get into office, but it seems that the powers that be, are way more powerful than anyone could have known.
It seems it may be too late to ever have a hope of getting our country back from the corporations, so I guess it should be We the corporation for the corporation and by the corporation.

[Roscoe]

Yeah....let's get rid of all the corporations. Brilliant...and what will take their place?

Hey? Maybe the government can run all those nasty corporations?

Try taking your point to a logical conclusion now and then.....

Roscoe

[cobra bill]

I never said to get rid of them, they need to be put back in their place, this is not what the founding fathers had in mind, they had to come under review every 2 years and if they were found to be not beneficial to the country they would lose the corporate status, they are now arguing for personhood, so they can have free reign of campaign financing, as a first amendment right, this is dangerous and needs to be stopped. The way the supreme court is stacked in favor of the corporations, this will be set as president and that, will be judicial activism.

[BeanCounter]

Originally Posted by cobra bill

I never said to get rid of them, they need to be put back in their place, this is not what the founding fathers had in mind, they had to come under review every 2 years and if they were found to be not beneficial to the country they would lose the corporate status, they are now arguing for personhood, so they can have free reign of campaign financing, as a first amendment right, this is dangerous and needs to be stopped. The way the supreme court is stacked in favor of the corporations, this will be set as president and that, will be judicial activism.

And would you expect the same from the Unions and groups like MoveOn and Acorn?

[Excaliber]

I would! It's pretty clear that corporations, left to police themselves will fail miserably. Wall Street, the bankers, others offer clear examples of that. It's easy to say we need less governement, but in some areas perhaps we need more? More oversight isn't a bad thing when it's done correctly. Correctly of course is the fundamental issue, how, when, where to do it, opinion's vary considerably.