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How come Republicans lie when they say the Community Reinvestment Act was responsible for economic collapse?
In a paper published on the website of the Federal Reserve Bank of San Francisco, Michigan law professor Michael Barr stated that as of 2005: "Only 25 percent of subprime loans were made by banks and thrifts, and the Federal Reserve reports that only six percent of subprime loans were CRA-eligible."
http://www.frbsf.org/publications/community/cra/co...
Similarly, a 2008 study by a law firm specializing in CRA compliance estimated that in the 15 most populous metropolitan areas, 84.3 percent of subprime loans in 2006 were made by financial institutions not governed by the CRA.
http://www.traigerlaw.com/publications/addendum_to...
Bernanke: Experience "runs counter to the charge that CRA was at the root of, or otherwise contributed in any substantive way to, the current mortgage difficulties."
http://menendez.senate.gov/pdf/112508ResponsefromB...
SF Reserve Bank's Yellen: "[S]tudies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households."
"Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans, and studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households."
I can't take anyone seriously who gives me You Tube videos as a counter argument.
7 Answers
- MehLv 71 decade agoFavorite Answer
Let's review: In order to curry congressional support after their accounting scandals in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased financing of "affordable housing." They became the largest buyers of subprime and Alt-A mortgages between 2004 and 2007, with total GSE exposure eventually exceeding $1 trillion. In doing so, they stimulated the growth of the subpar mortgage market and substantially magnified the costs of its collapse.
- coldfuseLv 71 decade ago
This is a rather odd way to ask the question; nonetheless you make a good point. In fact, mortgage companies, which are not national banks, were responsible for a good deal of the subprime mess.
A more likely scenario is that banks were given an outlet to sell their loans, with little or no risk, to Fannie Mae. Everybody thought Fannie Mae's bundled mortgage products were golden, when they were not. The subprime mess and housing bubble burst can be laid squarely at the feet of those who protected the government sponsored enterprises (like FNMA) and who somehow believed that a house is a "right." It is not; in fact, it is a huge decision and responsibility.
As a former bank employee, however, I can assure you that the threats - including personal threats, directly to senior bank managers - from organizations like ACORN was very real. This was the result of CRA, more than the subprimes. There were consequences for banks who weren't willing to "play ball" in poor communities, which was at the root of many problem loans.
People with no jobs and weak work histories have no business being loaned money, yet that is what some banks had to do in order to be granted approvals to purchase other out of state banks, etc.
The web is very tangled.
- as.erwinLv 61 decade ago
OK! So, riddle me this...
2 "unfunded" tax cuts... Right? That is what your party claims.
YET! Obama claims that 98% of all Americans got a "tax cut" through the "stimulus".
And then, he claimed that small business will get a "tax cut" with the recent investment law passed.
So explain that? How are these funded?
You guys make no sense... the only way you can even participate in an issue is to have an argument on both sides.
You can't have it both ways!
- Boss HLv 71 decade ago
because they are poorly informed, naive, unaccountable, irresponsible, irrational beings that are unwilling to listen to the truth, because it would oppose their political views.
One more time for the all the people who think they are smart republicans out there.... the CRA did not create a real estate boom. If it would have, it would have created it in the 70s.
The real estate boom was created by reduction in interest rates and reduction in capital gains taxes on real estate investment.
Do you people understand anything at all?
Source(s): Meh, subprime lending has been around for a long time. It has never ever been a problem until the Glass Steagall act was eroded allowing asset management services to be consolidate into one business, a situation that was largely viewed as creating the Great Depression leading to bank collapse when the stock market crashed. It was the insuring of risky investments that caused banks to collapse this time just as it did when they were isuring risky investments bought on margin in the past. It is too bad you can't be bought for what you know and sold for what you think you do. - How do you think about the answers? You can sign in to vote the answer.
- smsmith500Lv 71 decade ago
So according to these people we didn't have a housing bubble and the real estate market didn't collapse? That's such a load off my mind.
I have to agree about youtube, too many libs use it as a source.
- Anonymous1 decade ago
Not a lie
