Private sector parasites

I guess we didn't have a financial crisis according the the AEI.

Fortunately, there are honest thinking people who investigated the crisis and report the truth:

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.

http://news.investors.com/ibd-edito...vestment-act-cra-mortgage-defaults.htm?p=full

 

Quoted for - posterity.

 

Unproductive, rent-extracting parasites. Is this the government we're talking about?

 

How do u feel about governments 'extracting' rent in the form of taxes from property owners?

You have to be a communist to agree with this article. People who already have a home buy other property for the sole reason of earning a profit, either through rent or by selling. If you think this should not be allowed, then where the fuck are the people who can't afford to purchase property, going to live? LOL

 

This is where the person who wrote the article would answer, "Why theyd live in their government assigned bunks of course" Because the only way the system could work would be through communism, whoever wrote the article is clearly a commie, and ak47 in his rush to post anything that would poo poo on successful people didnt even realise it.

 

Exactly max. 'progressives' just don't realize how poorly thought out (and un-American) all of their plans are. old, shitty, unsuccessful ideas all in the name of some twisted sense of 'fairness'.

 

He realized it. He's essentially admitted he's a progressive. Not much difference between the two.

 

Taxes are a necessary evil, can we please get beyond talking as if all taxation is theft?

The world's economies were brought to their knees this latest crisis thank to the desperation of capital seeking a return (it beats working). There is a distinction, but merely quantitative, between the little guys and the big guys who speculate for "a living".

 

I rent an apartment in a family-owned apartment complex. My landlord's family has owned this property since 1945 (there's actually a 1935 photo of the property in the San Diego Historical Society database).

We enjoy below-market rents. In fact, there is a nearly identical complex four blocks from here, managed by a real estate company, that rents apartments with my exact same floor plan for $225 more per month than what I pay. I, and most of the tenants where I live, like our landlord and he likes us. Renters and landlords don't have to be enemies. Neither do proletariat and bourgeois. It's just the ideologues who want to play the victim that make it a fight.

 

Sorry, I should have mentioned that, my reply is intended for ideas which came out in two other posts, not you.