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

OhNoItsDEVO 13,393 180 February 13, 2013 at 02:50 PM Get Investors Business Daily Coupons
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.

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#31
Quote from Radeck View Post :
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
Probably 100 times the number of jobs being advertised now vs. Jan, 2009.

Jobs are being added regularly (over 4M) rather than 750K jobs lost in Dec 2008.

You're welcome.
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#32
Quote from 124nic8 View Post :
Probably 100 times the number of jobs being advertised now vs. Jan, 2009.

Jobs are being added regularly (over 4M) rather than 750K jobs lost in Dec 2008.

You're welcome.
12M are without work (an underestimated number), and adding 4M after losing millions more than that is hardly a "vast" improvement. The economy isn't even creating enough jobs to keep up with population growth....but that's ok...i wasn't expecting a real answer anyway.
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#33
Quote from Radeck View Post :
12M are without work (an underestimated number), and adding 4M after losing millions more than that is hardly a "vast" improvement. The economy isn't even creating enough jobs to keep up with population growth....but that's ok...i wasn't expecting a real answer anyway.
We are gaining jobs, not bleeding at a huge rate as in Dec 2008.

That is a vast improvement whether you recognize it or not.

but that's ok...i wasn't expecting you to acknowlege reality.
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#34
Quote from OhNoItsDEVO View Post :
If the info I presented in the OP is wrong, I apologize.
The thread should be closed.
Huge respect.
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Quote from charles052 View Post :
You have blind faith whereas I do not.

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I can't escape the mental picture. theblaze.com is very clearly some sort of information anus yet some posters seem eager to attach their lips and deliver the product here.
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#35
There hasn't been a single person who could answer these questions.


1. What was the total balance of securitized CRA mortgages.

2. What was the total balance of securitized CRA mortgages that were eventually put into CDOs.

3. What was the total balance of securitized CRA mortgages that were put into CDOs which had CDS issued against them.

4. What was the static pool losses on securitized CRA mortgages.

5. What was the total balance of securitized CRA mortgages that were either first-issue RMBS, CDOs or Synthetic CDOs that were sold into SIVs, SecArb, or multi-seller conduit securitizations.

5. What was the overall terms of securitized CRA mortgages, for example, were they No/Low doc? IO? Option-Arm? Teaser rate?


Until those can be answered, which I have never seen them answered, then the correlation between CRA and the mortgage crisis is dubious at best. The overall volume of CRA mortgages to the entire universe of subprime mortgages during the bubble years was minuscule. Further, I don't think CRA mortgages, for the most part, were sold into securitizations, which was the primary vehicle for leveraging the mortgages and ultimately drove borrowing costs, underwriting/rating fees and CDS ridiculousness.
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#36
Quote from 124nic8 View Post :
Do you think racism is the exclusive province of actions which are mitigation for past racism?
Mitigation of racism? Wouldn't that be the same thing as delayed racism with a new target?

Racism is showing favor or disfavor for one or more races in any action. You can not combine one pro white racist action with one pro black racist action and expect resolution. Two wrongs still do not make a right.
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Before you criticize someone, you should walk a mile in their shoes. That way when you criticize them, you are a mile away from them and you have their shoes.
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#37
Quote from jplayland View Post :
Mitigation of racism? Wouldn't that be the same thing as delayed racism with a new target?
Yes, but it is not racist oppression of a minority.

Note, that the bad part is oppression.

Quote :
Racism is showing favor or disfavor for one or more races in any action. You can not combine one pro white racist action with one pro black racist action and expect resolution. Two wrongs still do not make a right.
Except that reparation is not a wrong, it is a justified penalty for a wrong.
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#38
Quote from jplayland View Post :
Mitigation of racism? Wouldn't that be the same thing as delayed racism with a new target?

Racism is showing favor or disfavor for one or more races in any action. You can not combine one pro white racist action with one pro black racist action and expect resolution. Two wrongs still do not make a right.
Quote from 124nic8 View Post :
Yes, but it is not racist oppression of a minority.

Note, that the bad part is oppression.



Except that reparation is not a wrong, it is a justified penalty for a wrong.
You seem to have fogotten you are dealing with a poster that has consistently been for inter-generational justice as defined by shared skin color and not by whether or not the person alive today is even related to those affected by the policies of yesteryear.
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If I appear to be ignoring your posts, it's probably because you are on my ignore list.

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#39
Quote from 124nic8 View Post :
Yes, but it is not racist oppression of a minority.

Note, that the bad part is oppression.



Except that reparation is not a wrong, it is a justified penalty for a wrong.
Oppression is bad.

So is enforcing penalties on someone who did not commit a wrong action and who only possibly benefited from that wrong action.
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#40
Quote from Xygonn View Post :
You seem to have fogotten you are dealing with a poster that has consistently been for inter-generational justice as defined by shared skin color and not by whether or not the person alive today is even related to those affected by the policies of yesteryear.
No, it is entirely clear that minorities whom are alive today, WERE/ARE affected by the official policies of years past.

And are still affected by unofficial policies of today in some parts of the country.

And I'll thank you to refrain from your erroneous characterizations of my views.
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Last edited by 124nic8 February 25, 2013 at 11:55 AM.
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#41
Quote from yourlefthand View Post :
Oppression is bad.

So is enforcing penalties on someone who did not commit a wrong action and who only possibly benefited from that wrong action.
There is no doubt that the white majority benefitted from centuries of free labor of blacks.
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#42
Quote from 124nic8 View Post :
No, it is entirely clear that minorities whom are alive today, WERE affected by the official policies of years past.

And are still affected by unofficial policies of today in some parts of the country.

And I'll thank you to refrain from your erroneous characterizations of my views.
It's not erroneous. You said you are OK with Affirmative Action (AKA) preferential treatment based on race because of the decades of slavery and discrimination they were subjected to. Why backpedal now?
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#43
Quote from 124nic8 View Post :
There is no doubt that the white majority benefitted from centuries of free labor of blacks.
So it's OK to give blacks preferential treatment? How can you say that and then accuse Xygonn of erroneously characterizing your views?
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#44
Quote from andyfico View Post :
It's not erroneous. You said you are OK with Affirmative Action (AKA) preferential treatment based on race because of the decades of slavery and discrimination they were subjected to. Why backpedal now?
It is erroneous:

Quote :
not by whether or not the person alive today is even related to those affected by the policies of yesteryear.
If persons alive today are not affected, then reparations are not justified.

But it is clear they ARE affected.

Just cause you don't understand, does not mean my statement is wrong.

Quote from andyfico View Post :
So it's OK to give blacks preferential treatment? How can you say that and then accuse Xygonn of erroneously characterizing your views?
Clearly you don't understand, so I'll thank you for staying out of my discussion with Xygonn.
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Last edited by 124nic8 February 25, 2013 at 12:05 PM. Reason: Automerged Doublepost
#45
Quote from 124nic8 View Post :
1. It is erroneous:



2. I'll thank you for staying out of my discussion with Xygonn.
1. No, it's not since you are advocating for unequal treatment.

2. Please stop posting in public forums and take your conversation to PM if you want to have a private discussion on a public forum. I'll thank you for following my advice.
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Last edited by andyfico February 25, 2013 at 12:22 PM.
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