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The CRA... another failed attempt at social engineering by the feel good liberals.
How 'bout instead of bailing out the fat cats, the government take the 7B and divide it up among Americans that are 18 years old or older? In round figures $425,000 each. It would come as taxable income which means the gov't would get a portion of it back. NOW, the citizens SPEND that money, pay off loans and the good/bad mortgages, buy new cars, start savings accounts and college plans for their kids, travel, invest for their retirement and put the money back into the economy growing the GNP, creating jobs.
Reduce the "power" of banks to CREATE money out of nothing. By this I mean that when you take a loan at a bank, they are not giving you money that _they_ hold. Instead your mortgage becomes fiat legal tender, negotiable and of value and can be sold or traded. You sign the mortgage, the bank "creates" the money by tapping a few keys on the keyboard and crediting your account the amount of the loan. NEW money! I thought only the government could "print" money? A bank loan is just "virtual" money.
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Hey I agree with Swampy. Will someone hand me that cyanide tablet?
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WOW, Mikey, thank you! :-) But cyanide is not necessary, here... have a beer...
-D
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this CRA badmouthing is never going to die because it fits so neatly into conservative ideals. hell, thats the only thing keeping it alive.
if CRA was increasing the bank's risk then they would have tightened up on other loans to balance it out.
but that makes too much sense.
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If you are told you have to eat your vegetables before you can have dessert, you are not then obligated to eat so many vegetables that you bloat up and have to have your stomach pumped.
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CRA never ordered anyone to make a loan they didn't approve of.
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Mikey... the CRA "strongly urged" banks to offer what were called 'no doc' loans. (No proof of income, no down payment, no qualifying). I've talked to my local banker and he said he would not approve 'no doc' loans. The unscrupulous lenders went for it like dogs to a bone. The more loans they could write, the money they could make selling them to the investment banks. The investment banks don't vet the loans, and good loans got mixed in and bundled with bad loans when sold to the investment banks.
I don't know about where you live, but here in Florida many low and middle income rental units were turned into condos leaving the people who couldn't afford to buy with limited housing opportunities. Then the "flipping" market crashed leaving the condo speculators (formerly landlords) with units they couldn't sell in the flooded condo market and renters without affordable housing. Greed, greed, greed all based on the idea that low income people should be able to buy a home (CRA social engineering).
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Swampy
I'm on the way out the door right now. I'll get back with you on this.
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CRA never urged any bank to make "no doc" loans. The banks made up "no doc" loans all by themselves. CRA did make it more profitable for banks to make loans in neighborhoods that they had previously redlined as marginal.
As far as "bad" no-doc loans being bundled with other loans and sold as a security, who's responsible for that little whoopsie? The underwriters—the commercial banks and the investment banks. Oh, dear.
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No swampy, the CRA did not urge "no doc" loans on lenders. Just that loans be made to members of communities underrepresented in the loans up to that point. In other words, end the practice of "red-lining" by banks. Most of the "no-doc" and sub-prime loans causing the current problems were made by lenders such as mortgage companies not even under requirement to meet CRA rules, and not regulated as such. In fact the banks under CRA requirements were encouraged to make "responsible investments",
http://www.newamerica.net/blog/asset-bui...t-cra-7222. In fact, most banks with CRA loans did not sell them on the secondary market, but are holding them on their own books. So, sorry swampy, the facts don't support your supposition based on one statement from your local banker.
