The Obama Boom.

[Mavdog]

the fdic did not say east bridgewater savings needed to make "more risky loans", the fdic said it needs to make more loans. there is a huge difference, the fdic isn't telling it how to underwrite but what it needs to do according to its charter.

the investors in the bank should be unhappy, with about $30 Million invested the bank made a profit of $87,000. the investors in the bank would have done better just putting their money in a cd, even when cd's only are paying what? 1.5%?

[wmbwinn]

Mavdog, I don't bold stuff so that you can skip the rest of the content I give you. You obviously did not read the material I gave you. Rham Emanuel worked for Freddie Mac.

Again, I'll post the article and link and this time I'll bold it so you will read it:

Emanuel was named to the Board of Directors for the Federal Home Loan Mortgage Corporation ("Freddie Mac") by then President Bill Clinton in 2000. His position paid him $31,060 in 2000 and $231,655 in 2001.[29] During the time Emanuel spent on the board, Freddie Mac was plagued with scandals involving campaign contributions and accounting irregularities.[30] The Office of Federal Housing Enterprise Oversight (OFHEO) later accused the board of having "failed in its duty to follow up on matters brought to its attention." Emanuel resigned from the board in 2001 when he ran for congress.

I have shown you how Freddie and Fannie were used to incentivize and protect investors who would offer loans to those who traditionally could not get a home mortgage.

Did Freddie/Fannie force the issue? No. If that is your whole arguement, then fine.

But, they set it up to make the loans happen to put people who could not afford a certain home into that home.

It was done to offer poor people a home mortgage. Emotionally that is great. That sounds wonderful.

But, they meddled with the free market. The changes made it possible for a person who could get a loan able to get a loan for more house than he could previously.

In other words, the changes put in place for the little man made it possible for the middle class to buy upper eschelon homes they could not really afford.

Rahm Emmanuel was in Freddie Mac.

So, I showed that Obama's cabinet included a Freddie Mac crook. I showed how Freddie and Fannie incentivized and protected/backed the risk issue.

And, if you read my body of material (which you obviously never do as we have had this problem repeatedly in the past on other threads), you can see a lot of hints that the Freddie/Fannie changes occurred in the Clinton administration. Rahm Emanuel served in Freddie Mac under Clinton. So did Raines.

Your post illustrates your failure to read what I already gave you.

[Mavdog]

Originally Posted by wmbwinn

Mavdog, I don't bold stuff so that you can skip the rest of the content I give you. You obviously did not read the material I gave you. Rham Emanuel worked for Freddie Mac.

you believe that a member of a company's board of directors "worked for" that company? yikes.

in addition the time on the board was for a length of two years?

you can't be serious.

[wmbwinn]

Originally Posted by Mavdog

you believe that a member of a company's board of directors "worked for" that company? yikes.

in addition the time on the board was for a length of two years?

you can't be serious.

if you think that being on the board of Freddie Mac means he has no connection to what Freddie Mac did in that time period....

then yikes back to you...

[wmbwinn]

Mavdog:

when are you going to show that there is a regulation saying that a lender must make a loan to "persons who can't afford them"?

so far you've failed.

you have either failed to read or have failed to understand. I doubt that many others reading this would agree with you.

[wmbwinn]

Originally Posted by Mavdog

the fdic did not say east bridgewater savings needed to make "more risky loans", the fdic said it needs to make more loans. there is a huge difference, the fdic isn't telling it how to underwrite but what it needs to do according to its charter.

the investors in the bank should be unhappy, with about $30 Million invested the bank made a profit of $87,000. the investors in the bank would have done better just putting their money in a cd, even when cd's only are paying what? 1.5%?

Keep talking. Your inability to understand what you do read is only exceeded by your failure to read in the first place.

The bank profit of 87K is not the return on the 30 million investment. The 87 thousand is their profit which takes into account all of their banking expenses.

No one said that they GROSSED a 87K return on 30 million invested. They said that was the profit (net).

And, yes, this is not the first article to suggest pressure to loan money to those that are not as good a credit risk.

And, besides, this is what the Federal Government did via Freddie/Fannie:
1)they agreed to have Freddie/Fannie back the loans in the form of packaged financial products.
2)they removed the risk to the lender of monies.
3)they removed the risk to the middle men
4)they set up Freddie/Fannie to take the risk
5)they set up the Federal Government to back Freddie/Fannie

So, the system allows for easy profits and no risk. There is always risk but the risk belonged to the Feds ultimately. And, the Feds paid the price.

[wmbwinn]

February 12, 1995
The Reinvented Community Reinvestment Act
by Scott, Hal S.
Heritage Lecture #516

(Archived document, may contain errors)



The Reinvented Community Reinvestment Act By Hal S. Scott The Community Reinvestment Act (CRA), enacted in 1977 during the Carter Admini- stration, requires federal banking agencies to encourage banks and thrifts (banks, for short) to meet the credit needs of their local communities (including low and moderate income neighborhoods) consistent with safety and soundness considerations. Communities are the areas contiguous to bank offices. At the outset, there are major flaws in the concept. First, absent racial discrimination- which is subject to attack under a variety of other federal laws including the Equal Credit Opportunity and Fair Housing Acts (see the Justice Department's action in the Chevy Chase case)-why wouldn't the market dictate that banks loan to their communities when it was consistent with safety and soundness? The Act can only be understood as pressuring banks to make non-market loans. Second, why is this obligation put only on banks, as compared with other lenders- for ex- ample, finance companies or credit unions? If the idea is that banks should invest a portion of local savings in the communities from which they are taken, this flies in the face of the basic idea behind banking-to direct savings to their highest economic use. Only in this way can savers in poor communities get high rates of interest. Less profit for banks will translate into lower returns for savers who will eventually move their funds into other insti- tutions (mutual funds, for example) without such reinvestment obligations. Moreover, poor communities are capital poor, not capital rich. Real development cannot be meaningfully fi- nanced from local savings. If the idea is that banks should repay society for the benefit they receive from the federal safety net-deposit insurance, bailouts, lender-of-last resort facilities-those benefits have been vastly curtailed since the thrift crisis. Ken McLean, the key staffer for Senator Proxmire, the Chairman of the Senate Banking Committee in 1977 who pushed for CRA, has recently made this point. We now have risk-based deposit insurance, least-cost resolu- tion requirements for bank failures, and restrictions on central bank support. Indeed, banks over the last few decades have become less profitable; many large U.S. banks' shares have traded at discounts from book value. The imposition of social lending requirements on banks will mean that capital will go elsewhere. Third, it discourages banks from locating in poorer communities where they will be saddled with legal obligations to loan money.

CRA Today Under current regulations, four different CRA ratings are assigned to institutions based on examinations with regard to 12 very general assessment factors, many of which are proce- dural- for example, the extent of participation by the bank's board of directors in formulating and reviewing the bank's CRA policies. Some, however, are substantive- for example, the bank's participation in government-subsidized loans for housing, small busi-
Hal S. Scott is Nomura Professor of International Financial Systems, Harvard Law School. 11is is an updated version of his March 30, 1994, remarks to The Heritage Foundation's Regulatory Reform Advisory Council. ISSN 0272-1155 0 1995 by The Heritage Foundation.


ness, or small farms. There is no specific mention of racial minorities, women, or poor peo- ple; the emphasi's is on meeting the general credit needs of the community. CRA performance is taken into account by banking regulators whenever a banking organi- zation applies for permission to open a new branch or make an acquisition. Interest groups have used this requirement to file extensive protests against applications based on banks' al- leged shortcomings in fulfilling their CRA obligations under the general assessment factors. These protests can lead to hearings and significant costly delays in approving applications. In many cases, groups have threatened to file oppositions unless the bank agreed to loan an agreed amount of money to certain groups or projects, a form of regulatory blackmail. While regulators have generally given banks high CRA ratings based on examinations-94 percent were rated in the top two categories in 1994-they have not relied exclusively on these ex- aminations; instead they have been susceptible to the protests of interest groups.

The Clinton Administration Proposals In December 1993, the Clinton Administration proposed a new set of regulations to rein- vent the Community Reinvestment Act. It described its proposals as "performance" -based rather than "process" -based. Compliance was to be measured not by whether a bank had a process designed to achieve more community-based lending, but by whether such lending actually occurred. The proposals were also justified as providing more objective measures of CRA compliance in lieu of examiner discretion. The proposals were actually put forward on a coordinated basis by the banking regulators. The Administration has political control over three of them: the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the Office of the Comptroller of the Cur- rency. The Fed, which is independent, has reluctantly gone along, some governors secretly hoping, I believe, that adverse reaction would derail the proposals. When the December 1993 proposals were widely criticized by the industry as being too rigid and burdensome, and by community groups as being too lax, a new set of proposals were put forward in September 1994. Under the revised proposals, CRA compliance for large retail banks ($250 million or more in assets) is to be primarily measured by ratings under three performance tests-Lending, Investment, and Service Tests. Unlike the original proposal, performance is to be judged in "the context" in which the institution being evaluated operates. Thus, the agencies would take into account the demographics and credit needs of an institution's service area and the banks' product offerings, business strategy, and condition. The introduction of "context" represents a retreat from objectivity and a return to regulatory discretion.

The Lending Test The objective of the LendingTest is to increase certain types of lending-small business and small farm (annual revenues of $1 million or less), home mortgage, community develop- ment, and, at a bank's election, consumer loans (target loans)-to low- and moderate-income areas (target areas). "Community development loans" are explicitly de- fined as nonmarket loans for affordable housing or other community economic development needs. Performance under the LendingTest is measured by a number of factors, including the proportion of an institution's lending within its service area and the extent to which such loans are made to preferred borrowers within that area. Five rating categories are formulated

to measure performance (Outstanding, High Satisfactory, Low Satisfactory, Needs to Im- prove, Substantial Noncompliance). Under the original proposal, ratings were to be assigned primarily on the basis of a market share test: how a bank's market share of target loans in its target area compared with its mar- ket share of target loans in the rest of its service area. This test was heavily criticized. The measurement device did not insure more preferred lending. Suppose a bank had a market share of 20 percent in the target area and 40 percent outside. It could respond by decreasing its market share in target loans outside the target area, for example, by making more loans to large corporations, or increasing its loans within the target area by buying loans from banks with surplus target area loans. Deadweight compliance costs would be incurred with no benefit for low- or moderate-income areas. On the other hand, any real increase in target area lending could well lead banks to make riskier loans, given the limited pool of sound credits in these areas. Having rejected an objective but flawed market share performance measure, the proposal now ostensibly uses a catalog of factors to arrive at a rating, all of which call for substantial discretion on the part of examiners. For example, among the factors leading to an "outstand- ing" rating would be "excellent responsiveness" to the credit needs of its service area, being a "leader" in making community development loans, or "extensive use" of innova- tive or flexible lending practices. However, one suspects market share calculations may still be used in the background.

The Investment Test The Investment Test seeks to increase certain target investments that would benefit low- and moderate-income areas or persons within a bank's service area or a broader statewide or regional area that includes the service area. Target investments include investments (or grants) in support of affordable housing or other community economic development needs that are not being met by the private market. They also include investments that primarily benefit low- or moderate-income individuals and small businesses or small farms, as well as rent-free donations of branches in minority neighborhoods to any minority depository insti- tution or women's depository institution. Under the original proposal, Investment Test ratings would have been based on the ratio of target investments to capital. This would have penalized banks with high capital. For safety and soundness reasons we want to keep capital high; this would have given banks the opposite incentive. Under the revised proposal, the ratio test was dropped in favor of more discretionary criteria like those used for the Lending Test.

The Service Test The Service Test would evaluate a bank's systems for delivering retail banking services. For example, it would look at the distribution of a bank's branches and ATMs among differ- ent income areas, and its record of opening and closing branches and ATMS, or the availability of alternative systems for delivering retail services (e.g., home banking) as be- tween such areas. The Service Test would also evaluate the extent to which banks offer community development services-services provided to preferred groups (e.g., low- or mod- erate-income individuals) or small businesses or small farms. Again, a variety of discretionary criteria are used to arrive at a rating.

Composite Ratings A complex two-step system is used to arrive at an overa 11 CRA rating for retail banks. First, a bank's rating for each of the component tests would be assigned on the following ba- sis: Component Test Ratings Lending Investment Service Outstanding 12 6 6 High Satisfactory 9 4 4 Low Satisfactory 6 3 3 Needs to Improve 3 1 1 Substantial Noncompliance 0 0 0

Second, a bank's total points would be combined to reach an overall rating: Outstanding, 18 or more; Satisfactory, 9-17; Needs to Improve, 5-8; and Substantial Noncompliance, 0-4. At the urging of community groups who wished to put primary weight on lending, points as- signed to investment and service cannot, in combination, exceed those for lending. For example, if lending was 5 and combined investment and service were 8, the total score would-be 10 (5+5). High ratings do not ensure regulatory approvals-they are not conclusive evidence of per- formance. Community group protests can still be taken into account.

Special Rules: Strategic Plans, Wholesale and Small Banks The proposal would afford all banks an alternative to using the various Tests discussed above. A bank could have its CRA performance evaluated under a "strategic plan" submit- ted for public comment and approved by regulators. The plan has to specify measurable goals for lending, investment, and services. The rating would he based on whether a bank subs-tantially achieved those goals. Special rules are used to assess the performance of "wholesale" or "limited-purpose" banks, basically banks not engaged in the business of making retail loans. CRA performance for these banks is evaluated under a "Community Development Test" which focuses on community development loans and services in addition to application of the Investment Test. Banks will receive credit for loans, service, and investment both within and outside their service areas, but credit for outside the service area cannot normally exceed credit for inside. Small banks (less than $250 million in assets) are subject, at their election, to a stream- lined CRA review. Their performance would be evaluated on the basis of a watered-down version of the LendingTest.

Data Reporting Large banks would have new data reporting requirements with respect to target loans. Loan data would have to include the number of applications and denials and the number and amount of approvals for loans secured by properties outside a bank's mortgage service


area, data not presently required under the Home Mortgage Disclosure ACL While some of the additional reporting is less than originally proposed, the revised proposal requires, for the first time, that race and gender data be reported for small business and small farm loans.

Enforcement The revised proposal, like the original, calls for new enforcement techniques. Enforce- ment of the regulations would no longer be done exclusively through the application review process. The proposal would allow the regulatory agencies to impose cease-and-desist or- ders and civil money penalties in cases of the lowest rating-Substantial Noncompliance. The Department of Justice, however, determined in December 1994 that there was no authority under CRA for these new enforcement measures.

Commentaq These proposals will impose serious new compliance costs. The Independent Bankers As- sociation has estimated that current CRA compliance costs are $1 billion annually, and the American Bankers Association's recent survey estimated that the original proposals would cost an additional $100 million. Also, there is the potential for significantly higher loan losses. It is thus likely that, in the short term, the marginal cost of credit for all borrowers will increase (or the returns to savers will decrease) as banks pass on some of these new costs. And the amount of government tax revenue will decrease as banks become less profit- able. In the longer term, bank safety and soundness may be significantly eroded. Credit allocation schemes have indeed bankrupted banking systems in other countries. The Clinton Administration began reinventing CRA by trumpeting the virtue of perform- ance- rather than "process" -based assessments. At first, many banks were sympathetic to the approach; given CRA, they wanted to make a reasonable amount of targeted lending and be done with it. The original proposals, however, imposed costly new requirements with no safe harbors. After being widely criticized, the agencies retreated into the more shadowy world of regulatory discretion. The proposal is full of vague concepts like "con- text" and "innovative" lending. The scoring system is arbitrary. For example, why does lending count less than investment and service for an Outstanding score (12 compared with 6+6) than it does for a High Satisfactory score (9 compared with 4+4)? The Clinton propos- als demonstrate proverbial weaknesses of state planning-it is either too rigid or too discretionary. There is no way out of this dilemma short of discarding CRA entirely and per- mitting the market to determine who receives bank loans, investments, and services. The original purpose of CRA- to encourage lending within the bank's local community - has been significantly distorted by the Clinton proposals. Now, only loans to preferred borrowers (low- and moderate-income, small businesses, and small farms) within the local community count. Rather than recognizing that wholesale banks have no "local commu- nity" but rather serve national and international markets, wholesale banks are directed to steer investments or grants to preferred recipients. And by asking for new data on the sex and gender of borrowers, a clear message is being sent as to which preferred borrowers or re- cipients may count the most. These initiatives are completely misguided. The entire class of targeted borrowers would be better served by loans made to the most productive enter- prises because those firms can provide more jobs to everyone, including the targeted borrowers. It is wrong to require consumers to subsidize non-market (e.g., overly risky) loans by paying higher bank charges. The original and revised proposals were importantly shaped by the input of community groups. These groups have been successful in securing their own piece of the pie in these

proposals. Under the Investment Test, qualified investments include grants to minority- and women-owned. financial institutions and to organizations engaged in affordable housing rehabilitation and construction, as well as not-for-profit 'Organizations serving community economic development needs or supporting activities essential to the capacity of low- or moderate-income individuals to utilize credit or sustain economic development. Naturally, the regulations do not require any assessment of the performance of the grantees. Similar goodies for community groups are available under the Community Development Test for wholesale banks. Small banks get an exemption from these requirements; instead, they must comply with a watered-down version of the regulation. Why is there an exemption for small banks at all? Is this another manifestation of small is beautiful? The reason, of course, is clear-the Admini- stration feared their opposition. Small banks were not exempt from previous CRA requirements. There is no reason to give small banks a competitive edge over large banks, and at the margin such exemptions may discourage productive consolidations or mergers. These new proposals will be quite costly and counterproductive. Real costs will be im- posed on the general public. Borrowing costs will go up, and tax revenues (which will have to be made up somewhere) will go down. Productive activity will decrease. In the longer term we risk endangering the banking system, and ultimately the American economy, by adopting those kinds of command-and-control credit policies. The only virtue of the Clinton proposals is to show how costly the CRA is when taken se- riously. The right thing to do now is to repeal CRA; even in its watered-down form it was undesirable, basically offering leverage to community groups to grind their particular axes or enrich their own coffers.

I'm not going to bold it for you this time. Read the whole article.

Here is good evidence to support (further) two of my points:
1)Freddie and Fannie have been manipulated to put people in homes they couldn't get before
2)The bigger changes occurred under Clinton

[wmbwinn]

I lifted one paragraph out of an article dated September 23, 2008

Revise the Community Reinvestment Act (CRA): The CRA and other initiatives require banks and other financial institutions to better serve lower-income workers. While a worthy cause, the net effect is often to encourage loans at lower credit standards and to encourage people to buy houses they really cannot afford. As a result, too often they lose their homes, thereby losing savings that took a great effort to accumulate. Congress should revise these laws to ensure normal lending standards are maintained for all prospective mortgage borrowers.

http://www.heritage.org/Research/Economy/wm2075.cfm

If you are a good student, you will read the entire article and learn its context

[wmbwinn]

And, more daggers to make sure the dead horse I am beating is truly dead...

October 15, 2008
The CRA Cover-Up
by Ernest Istook
As always, it's the cover-up that sinks people. Liberals are working overtime to cover up their role in the mortgage meltdown. Not only did they block attempts to reform Government Sponsored Enterprises (GSEs) such as Fannie Mae and Freddie Mac before they could drag down our economy, but liberals also abused the Community Reinvestment Act (CRA), turning it into a vehicle for directing loans to unqualified homebuyers. The left knows that whoever shapes public understanding of what caused today's economic crisis can shape America's politics -- and its future -- for a great many years to come. Thus, they're pushing the notion that too little government regulation was at fault.

If the country buys this idea, liberals can enact a carbon-copy of FDR's response to the Great Depression, building a larger, more activist and ever-more-controlling federal government. They can exploit the mess by establishing a conventional wisdom that more government is the solution, rather than understanding how big government is a root cause of the current financial meltdown. Claiming it all sprung from a lack of regulation is a half-truth, and a Yiddish proverb says a half truth is a whole lie. Over-regulation opened the money spigot by requiring lenders to make poorly underwritten loans. Under-regulation then allowed politicians to exploit that. Although greed and dishonesty among both borrowers and lenders had major roles, the CRA and the GSEs were at the heart of what happened, setting up the now-toppled dominoes of Bear Stearns, Lehman Brothers, and others. Over-regulation through CRA, aided by HUD, became a huge problem and, alas, wasn't even addressed in the multi-billion dollar bailout. The Clinton Treasury Department's tough new regulations in 1995 compelled the banks to engage in far-riskier lending practices or receive a failing CRA grade.

To avoid an "F" from the CRA, which could jeopardize their viability, the banks were pressured to direct hundreds of billions of dollars in high-risk mortgages to inner-city and low-income neighborhoods. Moreover, under CRA pressure, banks would "hire" radical, non-profit groups like ACORN to find them customers. Once trillions of dollars began to flow, politicians and lobbyists tapped into this stream, and so did left-wing activist groups. According to George Mason University's Russell Roberts, the CRA was buttressed by other new regulations during the Clinton Administration. As Roberts writes, "For 1996, the Department of Housing and Urban Development (HUD) gave Fannie and Freddie an explicit target -- 42 percent of their mortgage financing had to go to borrowers with income below the median in their area. The target increased to 50 percent in 2000 and 52 percent in 2005. For 1996, HUD required that 12 percent of all mortgage purchases by Fannie and Freddie be "special affordable" loans, typically to borrowers with income less than 60 percent of their area's median income. That number was increased to 20 percent in 2000 and 22 percent in 2005. The 2008 goal was to be 28 percent." The banks were kept from rebelling by using Fannie Mae and Freddie Mac's deep pockets to buy these poor-quality loans and take them off the banks' books. Under-regulation of the GSEs -- Fannie Mae and Freddie Mac -- allowed the money stream to widen and keep flowing. There has always been an implicit understanding that taxpayers would cover GSE losses and this enabled them to attract money and pour it into the CRA-induced sub-prime market.

The Bush Administration had warned about this for years. Fannie and Freddie, however, could skim enough to pay for political protection, plus pay sky-high executive salaries and bonuses to well-connected political figures. Over the past decade, Fannie and Freddie combined to spend a reported $200 million on lobbying and campaign contributions. Now bailing them out may cost taxpayers $200 billion directly, and far more indirectly. The circle of political back-scratching centered around the theme of affordable housing, which the GSEs marketed heavily. Politicians wanted housing for low-income and poor credit risks, so they used Fannie and Freddie to further that objective, and the GSEs responded with campaign help for those politicians. In return, politicians resisted reforms. This was demonstrated at a 2004 House hearing, where Rep. Maxine Waters (D.-Calif.) denounced attempts to stiffen oversight and regulation of this duo "so as not to impede their affordable housing mission, a mission that has seen innovation flourish, from desktop underwriting to 100 percent loans." "Desktop underwriting" meant undocumented loans. No proof of income or credit history required. And zero down payment. Members of both parties were involved in protecting the system. But liberal Democrats were the dominant force. Recently, House Financial Services Chairman Barney Frank (D-Mass.) told The Boston Globe, "[Republicans'] failure to regulate sensibly ... endangered the economy and ... burdened it with bad stuff.... Their own philosophy blew up in their face. They were so extreme in their insistence that there be no government intervention that they have wound up provoking far more government intervention than the Democrats ever would have." But Frank is covering up his own role because he sang a far different tune in 2003, when the Bush Administration and many Republicans (including Sen. John McCain) tried to require Fannie and Freddie to comply with Securities and Exchange Commission regulations and other additional oversight requirements. Treasury Secretary John Snow, in fact, had specifically warned Congress that Fannie and Freddie needed a new supervisory structure so that both institutions would "maintain capital and reserves sufficient to support the risks that arise or exist in its business." Rep. Frank was unconcerned. He told a hearing, "Fannie Mae and Freddie Mac are not in a crisis." Rather, he said, they were "fundamentally sound," and criticisms of them were unjustified exaggerations and "disaster scenarios." Then he confirmed why: "The more pressure there is [to regulate] then the less I think we see in terms of affordable housing" He wanted to continue both the giveaway train supplying mortgages to those who couldn't afford them and the gravy train for politicians. This appealed to liberals and in particular to the Congressional Black Caucus, which received six-figure support from both Fannie and Freddie in 2007. The GSEs' major campaign largesse went to well-placed friends in key positions. The top six from 1998 thru 2008, according to the Center for Responsive Politics: Sen. Chris Dodd (D.-Conn.) $165,400 Sen. Barack Obama (D.-Ill.) $126,349 Sen. John Kerry (D.-Mass.) $111,000 Sen. Robert Bennett (R.-Utah) $107,999 Rep. Spencer Bachus (R.-Ala.) $103,300 Rep. Roy Blunt (R.-Mo.) $ 96,950 And almost everyone in Congress got something.

The GSEs lobbied hard, too. Their combined lobbying budget averaged $17 million a year. As described by Rep. Chris Shays (R.-Conn.), "They hire every lobbyist they can possibly hire. They hire some people to lobby and they hire other people not to lobby so the opposition cannot hire them." But friends at the top were not enough. They needed them in every community, too. The Community Reinvestment Act guaranteed a steady stream of low-quality, but highly political, loans. Congress passed the CRA in 1977 to combat "redlining," a lending practice that prevented loans to minority communities. Clinton Administration regulations in the '90s added teeth to CRA, requiring banks to show compliance with meeting low-income loan targets or face civil actions that could assess a $500,000 penalty for each violation. Banks were "encouraged" to comply by hiring community groups (including ACORN) who contracted with financiers to steer low-income applicants to their institutions. As the Manhattan Institute's Howard Husock wrote in 2000: "The Senate Banking Committee has estimated that, as a result of CRA, $9.5 billion so far has gone to pay for services and salaries of the nonprofit groups involved." The left created the system that paid its community organizers very handsomely, thanks to the regulations on the financial community.

As The Heritage Foundation's J.D. Foster recently noted, "While a worthy cause, the net effect [of CRA] is often to encourage loans at lower credit standards and to encourage people to buy houses they really cannot afford." The net effect has also brought the economy to the brink of disaster. But unless the American public is told, re-told, and educated about how we got here, there won't be reform of the bailed-out-but-still-alive GSEs nor of the CRA. Then we would witness more big government, giving us far more help than we can afford.

Ernest Istook is recovering from serving 14 years in Congress and is now a distinguished fellow at The Heritage Foundation.

First appeared in WorldNetDaily

http://www.heritage.org/Press/Commentary/ed101508b.cfm

[Mavdog]

Originally Posted by wmbwinn

Keep talking. Your inability to understand what you do read is only exceeded by your failure to read in the first place.

The bank profit of 87K is not the return on the 30 million investment. The 87 thousand is their profit which takes into account all of their banking expenses.

No one said that they GROSSED a 87K return on 30 million invested. They said that was the profit (net).

you post the most inane comments.

not familiar with and do not understand the phrase "return on equity" do you? maybe you should do some research before you post.

[alby]

I miss Bush.

[Underdog]

Originally Posted by alby

I miss Bush.

Are you kidding me???

The '70s can keep Bush - I prefer Shaved...




(is that joke old enough to be funny again yet?)

[dude1394]

Originally Posted by alby

I miss Bush.

Looks like we are all going to miss bush in the future.

[dude1394]

TOTUS...hilarious...

The Teleprompter Of The United States (TOTUS) has released the following excerpts of what it will be providing for the POTUS to read tonight:

Obama will tell Americans: “[W]e’ve put in place a comprehensive strategy designed to attack this crisis on all fronts. It’s a strategy to create jobs, to help responsible homeowners, to re-start lending, and to grow our economy over the long-term. And we are beginning to see signs of progress.”

“The budget I submitted to Congress will build our economic recovery on a stronger foundation, so that we do not face another crisis like this ten or twenty years from now. We invest in the renewable sources of energy that will lead to new jobs, new businesses, and less dependence on foreign oil. We invest in our schools and our teachers so that our children have the skills they need to compete with any workers in the world. We invest in reform that will bring down the cost of health care for families, businesses, and our government. And in this budget, we have made the tough choices necessary to cut our deficit in half by the end of my first term – even under the most pessimistic estimates.

Right...

[alexamenos]

i'm with alby...

bush is the new shaved.

[TheMaverick]

Obama failed tonight.

[92bDad]

Mav,

Are you stating that people are not influenced by pressure...if it's not a written law it didn't happen?

[Mavdog]

no, I'm saying that there was and is no law that says a lender must give loans to people that cannot possibly pay the loan back.

there was no "pressure" to give loans to people who were not capable of paying off the loan, the decision to give people loans was done solely by those who gave the loan, who approved the borrower.

the only law and the only pressure applied was to have lenders give loans to people who had never been allowed to borrow previously, and it is inaccurate and dishonest to say that all of those people, who were lower income and predominately minority, were not capable of paying the loans off.

you and I are qualified to borrow certain amounts, but we are not qualified to borrow unlimited amounts.

there's a huge difference.

[92bDad]

Originally Posted by Mavdog

no, I'm saying that there was and is no law that says a lender must give loans to people that cannot possibly pay the loan back.

there was no "pressure" to give loans to people who were not capable of paying off the loan, the decision to give people loans was done solely by those who gave the loan, who approved the borrower.

the only law and the only pressure applied was to have lenders give loans to people who had never been allowed to borrow previously, and it is inaccurate and dishonest to say that all of those people, who were lower income and predominately minority, were not capable of paying the loans off.

you and I are qualified to borrow certain amounts, but we are not qualified to borrow unlimited amounts.

there's a huge difference.

Clearly your view is clouded by your own view of the world...as is mine.

Personally, I believe it is dishonest not to report about the mob mentality pressure that groups such as ACORN put on these banks to lend money.

As a concept, lending that money appeared to be a good idea, but in practice the groups who pressured the banks did not truly understand the consequences of their actions.

The pressures are no different than when a court case is settled out of court. Typically some party does not want to drag something through a trial, in many cases some corporate entity does not want the negative publicity that would come from a trial.

Take the current AIG situation. The negative publicity is overwhelming, and it appears UNjustified, provided we dig a little deeper.

So think of that negative publicity threat as a weapon, a tool for groups like ACORN to use.

They launched a campaign and went after various lending institutions, who on the front end believed it to be a cost savings to hand out the loan rather than to stand up to the public scrutiny of a percieved ratial bias.

They thought these ACORN folks would go away, but instead they kept coming and before you know it...the banking institution is in a crisis.

Where's ACORN now when the banks need bailed out? Oh wait, they are trying to keep those same individuals from getting foreclosed on and evicted from their homes.

Somehow these people keep supporting ACORN, when they are the victims of a very crooked organization.

ACORN simply uses the emotions of needy people to gain their own power. ACORN is perhaps the modern era of the KKK or the MOB or any other crime organization.

No you will never see any written laws, but we have seen clearly that the tactics taken have ultimately caused the downfall of the U.S. economy. As long as people and politicians ignore the problem, they will only serve to fuel the consequences.

If we want to turn this country around, then we need to put a stop to ACORN and other radical groups like them...they remind me of a young terrorist radical group...seems to me that Hitler and the NAZI started off the same way as ACORN and OBAMA.

[Mavdog]

Originally Posted by 92bDad

Clearly your view is clouded by your own view of the world...as is mine.

as for my "view", it is based on facts and study of the situation.

No you will never see any written laws, but we have seen clearly that the tactics taken have ultimately caused the downfall of the U.S. economy. As long as people and politicians ignore the problem, they will only serve to fuel the consequences.

no, as long as lenders do not follow sound lending practices in underwriting the loans which are given they put their institutions, and our economy, at risk. that is the root, that is the cause, of our current crisis.

If we want to turn this country around, then we need to put a stop to ACORN and other radical groups like them...they remind me of a young terrorist radical group...seems to me that Hitler and the NAZI started off the same way as ACORN and OBAMA.

you do not have a very sound grasp of how hitler and his henchmen "started off". hitler and his followers attempted a coup when they "started off".

groups such as acorn who use protests to send out their message are utilizing a very american way, a way that has provided both positive and negative consequences through our nation's history. the right to protest is how our country was conceived (does concord and lexington, the boston tea party, ring a bell) and how many positive changes have been brought (freedom riders, the march in montgomery and sit ins for equal rights for example).

if "we put a stop to acorn" then we will also need to put a stop to all other public protests, and that is a slippery slope that should not be done.

there is ample ways for the truth to be told, and for everyone to be informed, trust in an open society and the free press.

do not trust in limitations on the people's right of free expression.

[dalmations202]

Indian Lore

The tribal wisdom of the Dakota Indians, passed down from generation to generation, says "When you discover that you are riding a dead horse, the best strategy is to dismount."

The Federal government employs more advanced strategies:

1. Buying a stronger whip.
2. Changing riders.
3. Appointing a committee to study the horse.
4. Arranging to visit other countries to see how other cultures ride
horses.
5. Lowering the standards so that dead horses can be included.
6. Reclassifying the dead horse as living impaired.
7. Hiring outside contractors to ride the dead horse.
8. Harnessing several dead horses together to increase speed.
9. Providing additional funding and/or training to increase dead horse's performance.
10. Doing a productivity study to see if lighter riders would improve
the dead horse's performance.
11. Declaring that as the dead horse does not have to be fed, it is less
costly, carries lower overhead and therefore contributes substantially more to the bottom line of the economy than live horses.
12. Rewriting the expected performance requirements for all horses.

And my personal favorite...........

13. Promoting the dead horse to a supervisory position.

[dude1394]

Ka-boom.....

http://pajamasmedia.com/instapundit/78237/

WELL, IT’S CHANGE: Worst Unemployment in 25 Years. “In his first three months as president, Barack Obama has oveseen a net job loss of nearly 2 million jobs. No president since Herbert Hoover has overseen a net job loss on his watch. At this rate, 30 million jobs could be lost by the time this guy is through.

[bobatundi]

Originally Posted by dude1394

Ka-boom.....

http://pajamasmedia.com/instapundit/78237/

Right...like all this unemployment is due to what Obama has done since January, and nothing to do with the policies of the previous eight years.

[Mavdog]

pretty selective parsing of the stats dude....

during 2008, 3.078 million workers lost their jobs. that's during bush's term btw.

so far, excluding Jan 2009 (remember obama wasn't in office until the end of that month), 1.919 million workers have been let go this year.

as we're only into the obama presidency for less than 4 months, it's absurd to claim that we have any idea of what the "net job loss..on his watch" will be. there are over 3.5 years left of "his watch", and it could just as easily be a net job gain, not loss, by the time obama's current term ends in jan 2013.

[dude1394]

Could be...but I doubt it. His "stimulus" won't create anything significant until the end of this year (shovels in the ground and all that) and by then we'll have cap-n-trade taxes, higher income taxes, probably higher inflation.

We'll see...by next years congressional elections...he'd better be turning it around I expect.

[dude1394]

With the new jobless numbers coming out...time to re-post the "stiumulus" in action.
http://strata-sphere.com/blog/index.php/archives/9009
[IMG]file:///C:/Users/SAMS/AppData/Local/Temp/moz-screenshot-12.jpg[/IMG][IMG]file:///C:/Users/SAMS/AppData/Local/Temp/moz-screenshot-13.jpg[/IMG]

Now as a deputized agent for oversight on this critical recovery program I can report that the stimulus job creation program is an abysmal failure. The following graph (click to enlarge) shows the status for those 6 federal entities I have been tracking as of 4/28/09:

I have been tracking the flow of money (or lack of therein) from weekly status reports provided by the government organizations. The first set of columns show the amount budgeted to the 5 departments and NASA. The second set of columns shows how much money as been allocated (obligated) to actual projects or programs. The final columns (if they could be seen) show the money disbursed into the economy.
3 months into the stimulus job creation effort the amount of money out the door verses allocated for these 6 entities is 0.03%:

[dude1394]

Ah the Barry plan...Right on schedule....
http://www.powerlineblog.com/archive.../05/023539.php

Such concrete projections--unfortunately for Obama--can be checked. Geoff at Innocent Bystander has begun charting reality against Obamanomics, with this graph:

Oopss...this would have been WITHOUT his plan. In other words...he's bought plenty of votes, but no jobs brotha'.

[chumdawg]

Wow, that looks extremely convincing.

[mary]

graphs are cool

reading is better

It should be understood that all of the estimates presented in this memo are subject to significant
margins of error. There is the obvious uncertainty that comes from modeling a hypothetical
package rather than the final legislation passed by the Congress. But, there is the more fundamental
uncertainty that comes with any estimate of the effects of a program. Our estimates of economic
relationships and rules of thumb are derived from historical experience and so will not apply exactly
in any given episode. Furthermore, the uncertainty is surely higher than normal now because the
current recession is unusual both in its fundamental causes and its severity.

[dude1394]

So let me get this straight. Barry has a graph in his request for 800billion bucks, claiming that if we don't let him spend it unemployment will be 9 instead of 8.5....moving down to ~7 in Q3 and because he puts a disclaimer in there then that's peachy keeno?

It's one thing to not hit it "exactly" it's quite another to miss the whole damn target. All this shows is that he's borrowed 800billion bucks for nothing(except for vote-buying). His program is supposed to increase employment by 4 million(table 1), turns out it's not going to increase diddly. Again except votes.

[Mavdog]

Originally Posted by dude1394

So let me get this straight. Barry has a graph in his request for 800billion bucks, claiming that if we don't let him spend it unemployment will be 9 instead of 8.5....moving down to ~7 in Q3 and because he puts a disclaimer in there then that's peachy keeno?

It's one thing to not hit it "exactly" it's quite another to miss the whole damn target. All this shows is that he's borrowed 800billion bucks for nothing(except for vote-buying). His program is supposed to increase employment by 4 million(table 1), turns out it's not going to increase diddly. Again except votes.

your numbers are off, according to the projections used at the time without any of the additional funding unemployment would increase to over 9%, with the package unemployment would be about 2 pts lower. that translates to a couple million jobs.

of course, these are only projections- calculated as a look into the future- which can vary.

iow the unemployment could have grown into the double digit area, or it could have been less.

one thing that is pretty obvious to most of us, doing nothing would be the wrong approach. as the actions towards the financial firms has proven, doing something brings a measure of security to the marketplace and puts a stop to the downward pressure that feeds upon itself.

the policies of the obama administration have at the least righted the ship in the near term, and the bleeding has stopped for the most part. although the partisan criticism shouldn't be a surprise to anyone, those who can remove their blinders should give a few props for this result.

the key will be in a couple of quarters, the focus is on 4Q 09 and 1Q 2010. if the economy begins to expand then the obama policies can be seen as hugely successful and the cost of this unprecedented intervention into the private sector can be unwound with minimal costs to you and I, the taxpayers.

for if there had been no action taken the costs would have been much, much greater to all of us.

[mary]

"He" doesn't put a disclaimer in there, the economic researchers do...because that is the nature of making economic forecasts. They're not "concrete projections". Its got nothing to do with politics.

Besides that, its only May and unemployment usually lags recovery - and we're probably not in recovery yet.

Besides that, its two data points.

[dude1394]

Didn't say it has. All I know is that he got YOU to give him 800billion dollars with a credit card and he's spent about oh 6% of what was an EMERGENCY!!! The sky is falling, give me the power I will HEAL us!!!

Nope...he'll direct this money to his own political pet projects under the guise of an emergency. No one ever said he wasn't a good politician. The recovery is obama's...how's he doing so far??

[92bDad]

[alexamenos]

Originally Posted by 92bDad

that's kind of funny

[dude1394]

The Barry Vote Stimulus Plan in action.

Green Shoots bustin' out all over

Tim Cavanaugh | May 21, 2009, 9:05pm
From the rising of the sun until the going down thereof, the benefits of the economic rescue packages bring forth savory fruits in rightwiseness abundantly. Sing their praises:
Unemployment claims set a record, again!


Stocks, dollar, treasuries fall on concerns over U.S. creditworthiness!! *



Congressional Budget Office sees unemployment rising for at least another year!!!


Thirty-fourth bank failure of the year!!!!


Real estate rental market takes a beating that is somewhat less brutal than special enhanced beating suffered by sales market!!!!!

[dude1394]

Grovey...In a little more that 100 days it looks like Barry is going to drop our bond rating below AAA. Since I don't know anything about finance..this does not sound like a good thing.

Treasury Secretary Timothy Geithner committed to cutting the budget deficit as concern about deteriorating U.S. creditworthiness deepened, and ascribed a sell-off in Treasuries to prospects for an economic recovery.

“It’s very important that this Congress and this president put in place policies that will bring those deficits down to a sustainable level over the medium term,” Geithner said in an interview with Bloomberg Television yesterday. He added that the target is reducing the gap to about 3 percent of gross domestic product, from a projected 12.9 percent this year.

The dollar extended declines today after Treasuries and American stocks slumped on concern the U.S. government’s debt rating may at some point be lowered. Bill Gross, the co-chief investment officer of Pacific Investment Management Co., said the U.S. “eventually” will lose its AAA grade.

[alexamenos]

Originally Posted by dude1394

Grovey...In a little more that 100 days it looks like Barry is going to drop our bond rating below AAA. Since I don't know anything about finance..this does not sound like a good thing.

[/B]

more on the loss of that triple-a rating--> link

for what it's worth, if anyone is waiting for some massive alarm to sound before they start to imagine that careening towards becoming a 3rd world banana republic country on the northern side of S. America.....

....welll.....the alarms just aren't going to get any louder than this.

[dude1394]

From the article.

How can one justify bestowing a triple A rating on an entity with an accumulated negative net worth of more than $11,000bn (€8,000bn, £7,000bn) and additional off-balance sheet obligations of $45,000bn? An entity that is set to run a $1,800bn-plus deficit for the current year and trillion dollar-plus deficits for years to come?

[dude1394]

May 23rd, 2009 at 5:19 pm by Cranky


J