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The Day Ronald Reagan Destroyed the American Labor Movement...
- Thread starter LAM
- Start date
New Study Confirms Economy Was Destroyed by Dem Policies
Democrats and the media insist the Community Reinvestment Act, the anti-redlining law beefed up by President Clinton, had nothing to do with the subprime mortgage crisis and recession.
But a new study by the respected National Bureau of Economic Research finds, "Yes, it did. We find that adherence to that act led to riskier lending by banks."
Added NBER: "There is a clear pattern of increased defaults for loans made by these banks in quarters around the (CRA) exam. Moreover, the effects are larger for loans made within CRA tracts," or predominantly low-income and minority areas.
To satisfy CRA examiners, "flexible" lending by large banks rose an average 5% and those loans defaulted about 15% more often, the 43-page study found.
The strongest link between CRA lending and defaults took place in the runup to the crisis ? 2004 to 2006 ? when banks rapidly sold CRA mortgages for securitization by Fannie Mae and Freddie Mac and Wall Street.
CRA regulations are at the core of Fannie's and Freddie's so-called affordable housing mission. In the early 1990s, a Democrat Congress gave HUD the authority to set and enforce (through fines) CRA-grade loan quotas at Fannie and Freddie.
It passed a law requiring the government-backed agencies to "assist insured depository institutions to meet their obligations under the (CRA)." The goal was to help banks meet lending quotas by buying their CRA loans.
But they had to loosen underwriting standards to do it. And that's what they did.
"We want your CRA loans because they help us meet our housing goals," Fannie Vice Chair Jamie Gorelick beseeched lenders gathered at a banking conference in 2000, just after HUD hiked the mortgage giant's affordable housing quotas to 50% and pressed it to buy more CRA-eligible loans to help meet those new targets. "We will buy them from your portfolios or package them into securities."
She described "CRA-friendly products" as mortgages with less than "3% down" and "flexible underwriting."
From 2001-2007, Fannie and Freddie bought roughly half of all CRA home loans, most carrying subprime features.
Lenders not subject to the CRA, such as subprime giant Countrywide Financial, still fell under its spell. Regulated by HUD, Countrywide and other lenders agreed to sign contracts with the government supporting such lending under threat of being brought under CRA rules.
"Countrywide can potentially help you meet your CRA goals by offering both whole loan and mortgage-backed securities that are eligible for CRA credit," the lender advertised to banks.
Housing analysts say the CRA is the central thread running through the subprime scandal ? from banks and subprime lenders to Fannie and Freddie to even Wall Street firms that took most of the heat for the crisis.
Obama officials, who are cracking the CRA whip anew against banks, insist the law played no role in the mortgage meltdown.
"CRA loans performed substantially better than subprime loans, and the CRA has been around for decades," argued senior Justice Department official Thomas Perez.
While the 1977 law was passed 30 years before the crisis, it underwent a major overhaul just 10 years earlier. Starting in 1995, banks were measured on their use of innovative and flexible" lending standards, which included reduced down payments and credit requirements.
Banks that didn't meet Clinton's tough new numerical lending targets were denied merger plans, among other penalties. CRA shakedown groups like Acorn held hostage the merger plans of banks like Citibank and Washington Mutual until they pledged more loans to credit-poor minorities (see chart).
WaMu CEO Kerry Killinger has blamed the CRA for his bank's overexposure to risky loans. He said he wanted to tighten lending requirements, but "such measures would have presented other issues such as the company's CRA rating and its commitment to serving its (low-income and minority) customers and communities."
Other large banks have reported serious delinquency rates on CRA home loans. Bank of America's 2009 10-K states: "Our CRA portfolio comprised 6% of the total residential mortgage balances, but 17% of nonperforming residential mortgage loans."
Under Clinton's revised CRA, moreover, banks for the first time earned CRA credit for purchasing subprime securities.
A wave of these securitizations began in 1997, which also happens to mark the start of the housing bubble.
Read More At Investor's Business Daily: New Study Blames Community Reinvestment Act For Mortgage Defaults - Investors.com
Follow us: @IBDinvestors on Twitter | InvestorsBusinessDaily on Facebook
New Study Blames Community Reinvestment Act For Mortgage Defaults - Investors.com
New Study Blames Community Reinvestment Act For Mortgage Defaults - Investors.com
Democrats and the media insist the Community Reinvestment Act, the anti-redlining law beefed up by President Clinton, had nothing to do with the subprime mortgage crisis and recession.
But a new study by the respected National Bureau of Economic Research finds, "Yes, it did. We find that adherence to that act led to riskier lending by banks."
Added NBER: "There is a clear pattern of increased defaults for loans made by these banks in quarters around the (CRA) exam. Moreover, the effects are larger for loans made within CRA tracts," or predominantly low-income and minority areas.
To satisfy CRA examiners, "flexible" lending by large banks rose an average 5% and those loans defaulted about 15% more often, the 43-page study found.
The strongest link between CRA lending and defaults took place in the runup to the crisis ? 2004 to 2006 ? when banks rapidly sold CRA mortgages for securitization by Fannie Mae and Freddie Mac and Wall Street.
CRA regulations are at the core of Fannie's and Freddie's so-called affordable housing mission. In the early 1990s, a Democrat Congress gave HUD the authority to set and enforce (through fines) CRA-grade loan quotas at Fannie and Freddie.
It passed a law requiring the government-backed agencies to "assist insured depository institutions to meet their obligations under the (CRA)." The goal was to help banks meet lending quotas by buying their CRA loans.
But they had to loosen underwriting standards to do it. And that's what they did.
"We want your CRA loans because they help us meet our housing goals," Fannie Vice Chair Jamie Gorelick beseeched lenders gathered at a banking conference in 2000, just after HUD hiked the mortgage giant's affordable housing quotas to 50% and pressed it to buy more CRA-eligible loans to help meet those new targets. "We will buy them from your portfolios or package them into securities."
She described "CRA-friendly products" as mortgages with less than "3% down" and "flexible underwriting."
From 2001-2007, Fannie and Freddie bought roughly half of all CRA home loans, most carrying subprime features.
Lenders not subject to the CRA, such as subprime giant Countrywide Financial, still fell under its spell. Regulated by HUD, Countrywide and other lenders agreed to sign contracts with the government supporting such lending under threat of being brought under CRA rules.
"Countrywide can potentially help you meet your CRA goals by offering both whole loan and mortgage-backed securities that are eligible for CRA credit," the lender advertised to banks.
Housing analysts say the CRA is the central thread running through the subprime scandal ? from banks and subprime lenders to Fannie and Freddie to even Wall Street firms that took most of the heat for the crisis.
Obama officials, who are cracking the CRA whip anew against banks, insist the law played no role in the mortgage meltdown.
"CRA loans performed substantially better than subprime loans, and the CRA has been around for decades," argued senior Justice Department official Thomas Perez.
While the 1977 law was passed 30 years before the crisis, it underwent a major overhaul just 10 years earlier. Starting in 1995, banks were measured on their use of innovative and flexible" lending standards, which included reduced down payments and credit requirements.
Banks that didn't meet Clinton's tough new numerical lending targets were denied merger plans, among other penalties. CRA shakedown groups like Acorn held hostage the merger plans of banks like Citibank and Washington Mutual until they pledged more loans to credit-poor minorities (see chart).
WaMu CEO Kerry Killinger has blamed the CRA for his bank's overexposure to risky loans. He said he wanted to tighten lending requirements, but "such measures would have presented other issues such as the company's CRA rating and its commitment to serving its (low-income and minority) customers and communities."
Other large banks have reported serious delinquency rates on CRA home loans. Bank of America's 2009 10-K states: "Our CRA portfolio comprised 6% of the total residential mortgage balances, but 17% of nonperforming residential mortgage loans."
Under Clinton's revised CRA, moreover, banks for the first time earned CRA credit for purchasing subprime securities.
A wave of these securitizations began in 1997, which also happens to mark the start of the housing bubble.
Read More At Investor's Business Daily: New Study Blames Community Reinvestment Act For Mortgage Defaults - Investors.com
Follow us: @IBDinvestors on Twitter | InvestorsBusinessDaily on Facebook
New Study Blames Community Reinvestment Act For Mortgage Defaults - Investors.com
New Study Blames Community Reinvestment Act For Mortgage Defaults - Investors.com
a little history about Regan and unions, he was the president of the screen actors guild (SAG) in the 40's were his duties routinely had him touring at GE locations which is how he eventually became a spokesman for them (GE) in the 1950's which began his rise into politics.
while president of SAG Regan lead several walk-outs (strikes) in the 1950's then in the 80's when Regan gets elected you see him turn against labor unions as instructed by the capitalists. state sponsored attacks on labor along with the long term effects of the 1947 passing of the Taft-Hartley Law crippled labor in the US.
while president of SAG Regan lead several walk-outs (strikes) in the 1950's then in the 80's when Regan gets elected you see him turn against labor unions as instructed by the capitalists. state sponsored attacks on labor along with the long term effects of the 1947 passing of the Taft-Hartley Law crippled labor in the US.
Don't worry about it. President Obama is helping the US economy. Didn't you hear we are at a super low unemployment rate because of all the flipping burger jobs we've added?
yes they do but see I don't expect any change for the better that's the difference, as long as more destructive policy isn't put into play that's a win in my book.
because when you view the past legislative history of the US and labor laws, etc. in it's entirety there is a very clear and distinct trend that nothing is going to change for the better.
there is only two choices, the slow walk off the economic cliff or the fast one.
Reagan didn't switch parties until the early 60's after he had already left acting and the president of SAG and had been working as a paid spokesman for GE all during the 50's (about a decade).
Whether I agree with what he did or not, you have to give him cudos for actually having balls. No one today actually would have the type of nuts to do something like that. Politicians are all crap, but I could get behind someone that actually made bold moves, and wasn't equivocal about it.
As for the strike, I could live with a 32 hour week. Hell, I could live with a 50 hour week.
As for the strike, I could live with a 32 hour week. Hell, I could live with a 50 hour week.
dogsoldier
Elite Member
Yep...you go get 'em LAM. Dig up another dead conservative to justify the fucked up state of the country. Then spin around and tell the rest of us how dumb we are. ATTA boy!
The point of this was to show the starting point for the shift from labor to capital control. All of you can make fun or say this is 30 years old, because it is, but it doesn't make it any less relevant to why we earn so much less now and have no real wage growth. You would all be happy as hell if the US was far more unionized and you were all getting paid about 50-60% more with better benefits. Wake up, its not about party affiliation, its called facts. A lot of pragmatists don't like the direction liberals are taking all the time, nor do they of the conservatives, its really a matter of the lesser of two evils since the system is completely fucked up.
Informative article, thanks LAM.
That situation is still referred to today.
That situation is still referred to today.
what you call justifying to the rest of us is explaining the root causes of the decline of the middle-class so rapidly since the 80's.
when you come to terms with the structural changes in the US economy that have had a negative cumulative effect the lack of sustainability is crystal clear.
sucks to be you and have been wrong your whole life about an economic"belief" system that was spoon fed to you and you gobbled it up and ate it.
dogsoldier
Elite Member
Sucks to be me? What do you all day LAM? You say you sit around digging up shit on the internet to show the world how smart you are. You bemoan the fact you can't see/have your girlfriend, but can jump in your plane and fly all over the place. You also say your day is spent watching moves on Netflix and "researching" to find stuff to throw in everyone's faces. Then when challenge you respond like a spoiled 16 year old girl pulling out everything you can find to show people how right, smart and wonderful you really are. Sucks to be me? I make 6 figures, work a job I earned, instead of watching internet movies last weekend, I went out with the wife, had a great time and better night. What did you do? So, sonny, I told you before, you need to get out more. Living in the basement of your mother's house sitting around in your shorts playing on the computer has warped your mind. Even if you have all the money you claim, you're a loser. You are a loser because of the need for self aggrandizement by belittle others and by your rabid need to be right on anything. Sucks to be me? Really. Fuck you.
So much win here. If this post was a meal i'd have to go to the bathroom stick my finger down my throat and throw up so I could go back to the table and continue eating more because of how delicious and filling this is. Sounds like you had a great weekend dude. Good for you
The punchline is that so many people think that one side or the other is working for them. Newsflash! Both sides want you to fail and they want you to fail miserably and think that it is your fault 100% of the time. If you succeed it means less for them. That is why they stack the deck in their favor.
Anyone who thinks a republican president would have made a difference is delusional.
Anyone who thinks a republican president would have made a difference is delusional.
yeah he voted for him twice and bought into all the "hope and change"
How's the "hope & change" working out for ya, LAM? lol
he just wouldn't have done as bad as obama
He would have been just as bad, just in a different form.
heckler7
Registered
I haven't heard one person complain that Obama care cost them their job. But I have personal experience with the recession and companies I worked at going under. just saying
i think the American people would have been a lot worse off after a Romney presidency than this one.... unless we were his billionaire buddies. it might have been nice though if only to watch the deluded realize they aren't in his club.
heckler7
Registered
true story, everyone hated Reagan when he was in office, just like everyone hated Clinton and hated Bush and now hates Obama just saying
I see no way we could possibly be worse off with Romney instead of Obama.
ever heard of paul ryan?
yup, and joe biden to. so what? this is the dumbest argument i've ever heard regarding why you should vote for the other guy. Who the hell votes the bottom on the ticket? LOL
"My country has in its wisdom contrived for me the most insignificant office that ever the invention of man contrived or his imagination conceived." John Adams on being VP
i honestly believe Romney is a sociopath. i mean seriously, who holds someone down while they scream and cry and hacks off their hair? character matters and that's about as bad as you can get.
dogsoldier
Elite Member
I honestly pray that a strong Jeffersonian Libertarian gets the office. I don't mean some out in the weeds wacko that seem to be the ones out there. Someone who sees both sides, puts the Constitution and people first. There is a one out there, he or she has just not risen yet.
