History repeating itself

[townpete]

Obama administration pushes banks to make home loans to people with weaker credit
 
Somehow he forgot about this....
 

Here's How The Community Reinvestment Act Led To The Housing Bubble
 
 

 

[KCFlyer]

What part of the community reinvestment act mandated that banks make loans to people wtih no jobs, or that banks fudge the income of applicants?  What part of the community reinvestment act forced banks to offer adjustable rate loans with teaser rates?  What part of the community reinvestment act mandated that banks bundle this crap up and sell it as investment grade?  And last but not least....why did so many who got a loan under JIMMY CARTER wait 27 year before letting it fall into foreclosure?    Indeed, the key line in the article that you seem to overlook is this one:
 

 but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.

 "Risky lending" isn't giving a decent interest rate to a person whose income qualifies him for a loan, but has a FICO score of 600.  "Risky Lending" is offering an adjustable rate loan with a teaser entry rate when the lender knows the applicant won't be able to afford it when the rate adjusts....they didn't care, they were selling the loan within weeks anyways.  "Risky Lending" is making loans to anyone who can fog a mirror...which is what Countrywide admits to doing.  And nowhere in any law does it mandate banks to do any of that.  It only mandated that banks could not "redline".  The rest was the work of the banks themselves.  

 

[delldude]

 
What part of the community reinvestment act mandated that banks make loans to people wtih no jobs, or that banks fudge the income of applicants?  What part of the community reinvestment act forced banks to offer adjustable rate loans with teaser rates?  What part of the community reinvestment act mandated that banks bundle this crap up and sell it as investment grade?  And last but not least....why did so many who got a loan under JIMMY CARTER wait 27 year before letting it fall into foreclosure?    Indeed, the key line in the article that you seem to overlook is this one:
 
 
 
 "Risky lending" isn't giving a decent interest rate to a person whose income qualifies him for a loan, but has a FICO score of 600.  "Risky Lending" is offering an adjustable rate loan with a teaser entry rate when the lender knows the applicant won't be able to afford it when the rate adjusts....they didn't care, they were selling the loan within weeks anyways.  "Risky Lending" is making loans to anyone who can fog a mirror...which is what Countrywide admits to doing.  And nowhere in any law does it mandate banks to do any of that.  It only mandated that banks could not "redline".  The rest was the work of the banks themselves.  
 

 
Because those under Carter weren't the problem.
 
Let's call it 'politically 'correct' bank loaning policy.
 

 
As originally enacted in 1977, the CRA vaguely mandated regulators to consider whether an insured bank was serving the needs of the “whole” community. For 16 years, the act was invoked rather infrequently, but 1993 marked a decisive turn in its enforcement. What changed? Substantial media and political attention was showered upon a 1992 Boston Federal Reserve Bank study of discrimination in home mortgage lending. This study concluded that, while there was no overt discrimination in banks’ allocation of mortgage funds, loan officers gave whites preferential treatment. The methodology of the study has since been questioned, but at the time it was highly influential with regulators and members of the incoming Clinton administration; in 1993, bank regulators initiated a major effort to reform the CRA regulations.
http://spectator.org/articles/42211/true-origins-financial-crisis

 

[townpete]

And lets not forget who else was a key player in this.
 

ACORN, Obama, and the Mortgage Mess
 
ACORN recognized very early the opportunity presented by the Community Reinvestment Act (CRA) of 1977. As Stanley Kurtz has reported, ACORN proudly touted "affirmative action" lending and pressured banks to make subprime loans. Madeline Talbott, a Chicago ACORN leader, boasted of "dragging banks kicking and screaming" into dubious loans. And, as Sol Stern reported in City Journal, ACORN also found a remunerative niche as an "advisor" to banks seeking regulatory approval. "Thus we have J.P. Morgan & Co., the legatee of the man who once symbolized for many all that was supposedly evil about American capitalism, suddenly donating hundreds of thousands of dollars to ACORN." Is this a great country or what? As conservative community activist Robert Woodson put it, "The same corporations that pay ransom to Jesse Jackson and Al Sharpton pay ransom to ACORN."
 
ACORN attracted Barack Obama in his youthful community organizing days. Madeline Talbott hired him to train her staff -- the very people who would later descend on Chicago's banks as CRA shakedown artists. The Democratic nominee later funneled money to the group through the Woods Fund, on whose board he sat, and through the Chicago Annenberg Challenge, ditto. Obama was not just sympathetic -- he was an ACORN fellow traveler.