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Forum Thread

Obama Boosts CRA Authority To Force Banks To Make Low-Income Loans

OhNoItsDEVO 180 February 13, 2013 at 02:50 PM
Here we go again...

http://news.investors.com/ibd-edi...htm?p=full

Quote :
Despite new evidence the Community Reinvestment Act led to riskier lending and played a key role in the subprime mortgage crisis, the Obama administration is broadening the anti-redlining regulation's authority and scope, spooking bankers.

A recent study by the National Bureau of Economic Research, the nation's pre-eminent economic research group, states that the CRA "clearly" had a major impact on the flood of subprime loans made in the late 1990s and 2000s, which directly led to the housing crisis.

By quietly expanding the regulation, analysts say President Obama is picking up where President Clinton left off in April 1995, when he rewrote rules for what had been a largely toothless law as first drafted in 1977....


The CRA overhaul "has been a disaster," said ex-BB&T CEO John Allison in his recent book on the financial crisis. He argued it's forced "banks to participate in making high-risk housing loans to low-income buyers who would not meet traditional bank lending standards."

Added Allison, who now heads the Cato Institute: "The default rates on these low-income loans are extraordinarily high."


Still, the Obama administration wants banks to step up approval of such low-income mortgages. And it's using the CRA to spur more lending, including:


• Forcing banks through threat of prosecution to expand their CRA assessment areas to include inner-city areas blighted by subprime foreclosures, where they are compelled to invest in new brick and mortar.

Many banks, in fact, are under direct federal orders to open new branches or ATMs in high-risk and unprofitable areas of Detroit, St. Louis and other cities hit hardest by the recession.

"If your assessment area looks like something you can eat — a bagel or is crescent shaped — that should be a red flag for your bank," senior Department of Justice official Tom Perez warned bankers serving areas mainly outside the inner city.

"DOJ wants banks to have a physical presence in the inner city," Washington-based Buckley Sandler LLP recently told clients, adding that "banks should carefully monitor loan data to determine whether an appropriate volume of loan originations emanate from minority areas."

• Ordering bank defendants accused of lending bias to underwrite riskier CRA loans at discounted rates.

For instance, Justice has ordered First United Security Bank of Alabama to "ensure that residential and CRA small business loan products are made available and marketed in majority African-American census tracts," while offered on terms "more advantageous to the applicant" than normal......
More information in the link provided. Thought I should stop there before I ended up posting a wall of text.

121 Comments

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#16
Quote from 124nic8 View Post :
Do you blame the "criminal" or the cop who fails to stop him?

You guys seem to blame the cop, when it suits.
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#17
Quote from Deusxmachina View Post :
Sounds kinda racist.
Do you think racism is the exclusive province of actions which are mitigation for past racism?
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#18
Quote from empiretc View Post :
You guys seem to blame the cop, when it suits.
The primary blame is always on the criminal. I blame the "cop" for failing to do his job when he knows what the criminal is doing and could have stopped it.

I blame both when the "criminal" bribes the cop to change the rules.

If the criminal was not screwing the public, the cop would not be necessary.
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#19
This won't blow up for a while and at that point, whomever is president will be blamed. Sounds familiar.....
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#20
Quote from andyfico View Post :
This won't blow up for a while and at that point, whomever is president will be blamed. Sounds familiar.....

Exactly!
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#21
Quote from OhNoItsDEVO View Post :
Here we go again...

http://news.investors.com/ibd-edi...htm?p=full



More information in the link provided. Thought I should stop there before I ended up posting a wall of text.
I'm just curious if at any point you thought that you should do at least a quick cursory google search on any information that you posted to see if it was actually true.

I finished reading the wall of text, then decided to google First United Security Bank of Alabama to see if their case supported what the article said since it's the only tangible claim made in what you posted. I mean, EX-BBT guy can say whatever he wants but a lawsuit is on the books.

The claim:
Quote :
Despite new evidence the Community Reinvestment Act led to riskier lending and played a key role in the subprime mortgage crisis, the Obama administration is broadening the anti-redlining regulation's authority and scope, spooking bankers.
The support:
Quote :
For instance, Justice has ordered First United Security Bank of Alabama to "ensure that residential and CRA small business loan products are made available and marketed in majority African-American census tracts," while offered on terms "more advantageous to the applicant" than normal.
================A QUESTION FOR YOU ALL===============

Without looking it up or googling it, do you think the First United Security Bank - DOJ case supports the claim?
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#22
Quote from andyfico View Post :
This won't blow up for a while and at that point, whomever is president will be blamed. Sounds familiar.....
When a POTUS has 8 years to fix a problem and fails to even attempt a fix, he has signed on to the policy and has a large share of the responsibility for the results.

Quote from loop610bob View Post :
Without looking it up or googling it, do you think the First United Security Bank - DOJ case supports the claim?
Based on the rep of the author, I'm guessing not.
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#23
Quote from 124nic8 View Post :
When a POTUS has 8 years to fix a problem and fails to even attempt a fix, he has signed on to the policy and has a large share of the responsibility for the results.

entering year 5 of this disaster.

and yet, everyone else is to blame. or, like in the case of Benghazi, no one is to blame....
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#24
Quote from empiretc View Post :
entering year 5 of this disaster.
And you think no fixes have been attempted?

There has been a vast improvement in the economy since 2009 whether your recognize it or not.

Quote :
and yet, everyone else is to blame. or, like in the case of Benghazi, no one is to blame....
Do you blame Bush for 9/11?
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#25
Quote from 124nic8 View Post :
And you think no fixes have been attempted?

So it's about attempts and not actual accomplishments?

Everyone gets a trophy!
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#26
Quote from empiretc View Post :
So it's about attempts and not actual accomplishments?
Lack of attempts to change demonstrates that the current policy is preferred.

Quote :
Everyone gets a trophy!
Except for those who don't even try.
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#27
Quote from loop610bob View Post :
I'm just curious if at any point you thought that you should do at least a quick cursory google search on any information that you posted to see if it was actually true.

I finished reading the wall of text, then decided to google First United Security Bank of Alabama to see if their case supported what the article said since it's the only tangible claim made in what you posted. I mean, EX-BBT guy can say whatever he wants but a lawsuit is on the books.

The claim:


The support:


================A QUESTION FOR YOU ALL===============

Without looking it up or googling it, do you think the First United Security Bank - DOJ case supports the claim?
I did the same thing and gave up after the second thing I checked was BS.
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#28
If the info I presented in the OP is wrong, I apologize.
The thread should be closed.
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#29
Quote from OhNoItsDEVO View Post :
If the info I presented in the OP is wrong, I apologize.
The thread should be closed.
I think it's important to keep watch on the CRA and what the true outcomes of its regulation results are. You can't reform and do better if you aren't paying attention and there's nothing done by government that should avoid tight scrutiny. I certainly agree with the undertone of the article.

The actual place they went sucks pretty bad though.
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#30
Quote from 124nic8 View Post :
And you think no fixes have been attempted?

There has been a vast improvement in the economy since 2009 whether your recognize it or not.
Really? last time i checked the unemployment rate (doctored as it is by the Obama hacks in government) is actually the same or even slightly worse today than when Obama took office. Please let us know what these "vast improvements" laugh out loud are
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