Well, that's suitably vague and proves nothing about anything. 60% engaged in an activity they would not have without CRA. Was that a "good some activity" or a "bad some activity"? Actually, it was usually a "good some activity"; here's a quote from your same paper: I'll agree. The belief is that since most large lenders had previously "redlined" predominately minority areas and refused to even consider loan applications in those areas, they were not being served at all, regardless of if there were credit worthy applicants in the area. The first line banks were lending somewhere else. I will agree that they are riskier. I will not agree that this characteristic was sufficient to cause a national mortgage and banking crisis, without predatory and fraudulent lending practices from shyster loan originators, fraudulent loan appraisers, fraudulent rating of debt instruments at the rating agencies, and peddling this fraudulently rated debt instruments to customers all over the world by investment banks and the big brokerage houses. I will agree with this, and you've convinced me that this played more of a role in this crisis than I saw a month ago. However, the overturn of Steagall had been underway for decades and it did not follow logically from CRA or any of its modifications: http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html We're close here. You think the govt. led the way, I think it is on private industry. Since when did a private business with any sense think the govt. had a good business model to emulate? Never, that I know of. I agree, generally. Middle class folks could get access to fair loan terms, and are experienced enough with them not to get fleeced too bad. So, I think we are comparing apples and oranges when you look at the two demographic areas. The poor inner city folks were targeted with the most toxic mortgages by loan originators who "left their ethics at the door". A failure of govt. regulation allowed this to happen, not the govt setting the example of responsible and profitable lending in the areas that CRA fostered. That was the conclusion of your paper. So, we had a much higher rate of failure in poor inner city areas, but not just because the residents were such poor credit risks, but because they were targeted and were easy marks due to their lack of experience. http://www.citypaper.com/news/story.asp?id=3611 I disagree that those laws are what caused the crisis. Egregious mortgage terms marketed in targeted fashion to poor and middle class consumers without the sophistication nor financial resources to access a decent loan, the failure of govt. to regulate the mortgage marketplace so egregious products could not be sold, unscrupulous loan originators, corrupt rating agencies, and corrupt companies who securitized and sold garbage they had paid to have rated AAA, those are the main culprits in this mess. You've gotten on this explanation about CRA, the laws, but you haven't said anything about the loan originators (who weren't attempting to comply with CRA), the rating agencies, and the securitizers who were selling the garbage. The law never told them to do it. Did the laws loosen, yes. Did they loosen enough to be called the main cause of this crisis? No. If the people had acted ethically and rationally, this would not have occurred, even with the looser laws. We've found a few agreements, but we still fundamentally disagree. You think it was the laws and their progressive loosening, I think the overall blame goes on the industry participants. Edit: It's interesting that on the recent CNBC expose "House of Cards" on the mortgage debacle, there is no mention of the laws changing, it totally focuses on the loan originators, the rating agencies, and the big securitizers.
Is Obama different than Bush? Bush's last month in office accomplished nothing and Obama's first month in office accomplished nothing so I guess so far the answer is yes. :thumb:
I have not see CNBC's program so I cant comment on its contents but if they are "totally focused" on mortgage loan originators, ratings agencies and securities backers they are missing other entities within the industry who should shoulder responsibility. There are plenty of scumbag mortgage people who are responsible for contributing to the mess, and I hope they are out of business today, but blame should be layed at the door step of numerous entities within the mortgage process. However, this aspect could be another topic by itself. I believe the government indirectly endorsed a permissive lending attitude through their own actions and laws that began in 1993. If the government was willing to take high risks with lower standards you're damn well sure private industry is going to follow. When you have morons like Barney Frank making comments about "taking risks" and "rolling the dice" under the premise of "helping people" what is he telling the private sector? We'll have to disagree on what caused this meltdown. I think the breakdown was systematic, cumulative and widely encompassing but started with the politically correct CRA program and compounded by subsequent legislation. If you take away the big 3 (CRA 1993, FANNIE 1998, FSMA 1999) this catastrophe would likely have been averted. I believe these laws were the cause because without them the final straws that broke our back would not have been possible.
DRC, We've had a good discussion. In general we both know there were many elements that factored in to the mortgage crisis and financial systerm meltdown. We generally agree on what those components are. We disagree on the relative importance of certain factors, and we could pursue this further, but I don't either of us will change our minds. I will let my last post above this stand as my closing soliloquy. I must compliment you on your calm demeanor and professionalism. This has been my most enjoyable discussion in FSA, and that is attibutable to you. Thanks!
To the both of you, I have thoroughly enjoyed this discussion. I actually learned quite a bit. It's nice to follow a debate where the participants take the time to research their positions, present their arguments civilly, and respect the other's position. Well done.
Agreed. :thumb: Its hard to remove the politics but if you really want to examine the why's and how's you need to.
