Community Reinvestment Act

festeringZit · Sep 29, 2008

Even Wikipedia has this one right...

http://en.wikipedia.org/wiki/Community_Reinvestment_Act

Original Act

The CRA was passed by the 95th United States Congress and signed into law by President Jimmy Carter in 1977 as a result of national grassroots pressure for affordable housing, and despite considerable opposition from the mainstream banking community.[1] Only one banker, Ron Grzywinski from ShoreBank in Chicago, testified in favor of the act.[2] The CRA mandates that each banking institution be evaluated to determine if it has met the credit needs of its entire community.

H. W. Bush Administration Changes of 1989

The Financial Institutions Reform Recovery and Enforcement Act of 1989 (FIRREA), enacted in the wake of the savings and loan crisis of the 1980s, increased public oversight of the process. It required the agencies to issue CRA ratings publicly and written performance evaluations using facts and data to support the agencies' conclusions. It also required a four-tiered CRA examination rating system with performance levels of "Outstanding," "Satisfactory," "Needs to Improve," or "Substantial Noncompliance."[6]

Clinton Administration Changes of 1995

In early 1993 President Bill Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities.[7
requiring strictly numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to targeted groups to collect a fee from the banks.[4][6]

The new rules, during a time when many banks were merging and needed to pass the CRA review process to do so, substantially increased the number and aggregate amount of loans to low- and moderate-income borrowers for home loans, some of which were "risky mortgages."



C-Gold · Sep 29, 2008

Let's increase access for mortgages for poor minorities who can't afford them.

Let's give houses to people who haven't earned them. Let's increase demand for an asset artificially. Let's create a bubble....

quot7quot · Sep 29, 2008

yeah...let's. What's the worst that can happen?

C-Gold · Sep 29, 2008

This is what happens when the government steps in.

DeathEatsaCracker · Sep 29, 2008

The default rate is only 2%. It's what the financial companies did with the mortgages that created this issue.

Yes, Dems got the ball rolling, but this is a bi-partisan screwjob.

festeringZit · Sep 29, 2008

Death Eats a Cracker said:
The default rate is only 2%. It's what the financial companies did with the mortgages that created this issue.

Yes, Dems got the ball rolling, but this is a bi-partisan screwjob.

Agreed.

DeathEatsaCracker · Sep 29, 2008

:toast:

See, we don't have to fight all the time. I guess getting ass raped by politicians makes us all kindred spirits.

festeringZit · Sep 29, 2008

Death Eats a Cracker said:
:toast:

See, we don't have to fight all the time. I guess getting ass raped by politicians makes us all kindred spirits.

That's how I feel... I feel like I've been raped by the US
government, both parties.

brucefan · Sep 30, 2008

quote=Death Eats a Cracker;5814309]The default rate is only 2%. It's what the financial companies did with the mortgages that created this issue.

Yes, Dems got the ball rolling, but this is a bi-partisan screw job.[/quote]

First of all, where are getting this figure from?

Second, why is the govt screwing with the free markets?

Loans , like every other product should be sold in a free market economy. Real simple, If I dont think you are going to pay me back, your going to get a high rate, or no loan at all. Why? Because if not. I LOSE!

Well, dont lose , because the GOVT ( FNMA AND FHLMC) have my back!

The problem was the this act was all born out of "fairness'

It makes me sick to even think about this crap

This is the Liberal mindset. Nice , honorable intentions, bUT SCREW

DarrylParsons · Sep 30, 2008

Saw someone raise this CRA point on the news and it was countered by a statement saying that 75-80% of the failed mortgages were issued by institutions that didn't even issue CRA mortgages.

It's all about the credit default swaps market and no one's talking about the fact that, for every loser on that market, there's a winner. Easiest way to solve the liquidity problem is to make the winners take instalment payments instead of a lump sum.

No one talks about it because the guys pushing for the legislation have a vested interest in the winners getting paid, so they just put up a cloud of smoke to make it seem more complicated than it is.

The details and the market pricing of the contracts might be complicated, but the very nature of a derivative security is not.

I wrote my congressman (who voted yes btw) about the above. I'll be watching C-SPAN to see if he reads my letter lol.