Dont blame the CRA blame Barney Frank

[Cassanova Frankenstein]

The CRA (community reinvestment act) doesnt force any bank to lend money. It just takes into account their lending practices before approving a merger or aquisition.

FRB: Speech, Gramlich -- The Community Reinvestment Act -- June 16, 1999

its an old paper but explains it well. You can find numerous papers at the fed that say the same thing

Heres a recent fed paper that explains the mortgage mess

FRB: Finance and Economics Discussion Series: Screen Reader Version - 200899

Iit blames the mortgage mess on bad underwriting. It really tap dances around no doc or low doc loans (aka stated income loans).


See blurb about CRA from fed that says CRA loans are profitable

FRB: Testimony--Braunstein, The Community Reinvestment Act--February 13, 2008

“Further, Federal Reserve research suggests that CRA covered institutions have been able to extend such loans profitably and that the performance of such loans is about the same as that of other mortgage loans.6 “


here's another fed paper explaining the "stated income loans" aspect of the crisis

http://www.federalreserve.gov/secrs/2006/august/20060801/op-1253/op-1253_3_1.pdf

Heres a nice link to a Greenspan speech

FRB: Speech, Greenspan--Understanding household debt obligations--February 23, 2004

here's a blurb about the speech
In February 2004, Fed Chairman Alan Greenspan endorsed alternative mortgages in a speech at a conference of the National Credit Union Association. "American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage," Greenspan said. Soon stated-income loans and subprime piggyback mortgages flooded the market as profit-hungry lenders offered "creative" home financing.”

just for good measure, here's a Bush speech

Remarks by the President on Homeownership - HUD

"We are here in Washington, D.C. to address problems. So I've set this goal for the country. We want 5.5 million more homeowners by 2010 -- million more minority homeowners by 2010. (Applause.) Five-and-a-half million families by 2010 will own a home. That is our goal. It is a realistic goal. But it's going to mean we're going to have to work hard to achieve the goal, all of us. And by all of us, I mean not only the federal government, but the private sector, as well."


so let me sum up. CRA loans are profitable. Mortgage crisis started in 2003 due to bad underwriting. Greenspand encourages banks to be creative. Stated income loans suck. So how is this Barney Franks fault? thats easy he's gay. He made W and Greenspan look the other way as the financial system collapsed.

[Cassanova Frankenstein]

HOLD THE PHONE. Now,I believe right wing websites, pundits and commentators as much as the next guy. I know that they are only looking out for my best interests and not Exxon's or Haliburton's. I believed them when they told me it was the CRA that caused the crisis but that turned out not to be true. The Federal Reserve told me CRA loans are profitable for the lenders and that bad underwriting caused the mortgage crisis. So then I believed them that it was Barney Frank's fault but then I read this

World business, finance and political news from the Financial Times– FT.com Europe

go the Financial Times of London website and put Mike Oxley in the search button and click on the article titled " Oxley hits back at ideologues".

surely Mike Oxley, Ohio republican and former chairman of the House Financial Services Committee is hitting back at those left wing ideologues who only want to destroy America. Well thats what I thought until I read it Can you believe the ideologues he is refering to are W and Greenspan?!?

"Instead, the Ohio Republican who headed the House financial services committee until his retirement after mid-term elections last year, blames the mess on ideologues within the White House as well as Alan Greenspan, former chairman of the Federal Reserve.
The critics have forgotten that the House passed a GSE reform bill in 2005 that could well have prevented the current crisis, says Mr Oxley, now vice-chairman of Nasdaq.

He fumes about the criticism of his House colleagues. “All the handwringing and bedwetting is going on without remembering how the House stepped up on this,” he says. “What did we get from the White House? We got a one-finger salute.”

The House bill, the 2005 Federal Housing Finance Reform Act, would have created a stronger regulator with new powers to increase capital at Fannie and Freddie, to limit their portfolios and to deal with the possibility of receivership.

Mr Oxley reached out to Barney Frank, then the ranking Democrat on the committee and now its chairman, to secure support on the other side of the aisle. But after winning bipartisan support in the House, where the bill passed by 331 to 90 votes, the legislation lacked a champion in the Senate and faced hostility from the Bush administration
"

what?!? how can this be?!? I read literally hundreds of editorials and blogs that McCain tried to regulate Freddie and fannie in 2005 and the evil democrats stopped him. not one of them ever mentioned that the house version passed with full bipartisan support (331 to 90 ). The senate version never made it to the floor for a vote and now I find out that the ranking republican of the House Financial Services Committee says it was W and Greenspan who fought the bill. If this true, could it be possible that Techdude is lying too?

[Cassanova Frankenstein]

Man, oh man. This just gets worse and worse. The more I tried to prove that Barney Frank is completely responisble for the economic crisis, the more I proved it was actually the republicans. Geez, that sucks. It turns out that the senate bill that would have limited Freddie and Fannie's leverage never made it out of committee. Surely it was some legislative trick by the democrats that kept it from going to the floor for a vote but alas no such trick exists. With a 55 seat majority in the senate, the republicans could have brought it to the floor for a vote anytime they wanted. And get this, Barney Frank was in the house not the senate. Its hard not forget that the house actually passed a bill because its never mentioned. Now this Senate bill may not have prevented the crisis as it did not deal the underlying cause (poor lending standards) but it would surely have limited the magnitude.

I dont want to say Republican Chairman of the House Financial Services Committee Mike Oxley is telling the truth when he blames W and Greenspan for killing the bill but I am really running out of options on what to beleive. Quick! Somebody post some doctored photo of Obama so I can get my mind right and go back to blaming the democrats.

[Cassanova Frankenstein]

why? why? why did I start looking into this? The more I look the worse it gets. I am still trying to prove its Barney Frank's fault but I keep rolling snake eyes. Now I come across this article explaining how the five investment banks got their capital restrictions lowered in 2004.

How U.S. regulators laid the groundwork for disaster - International Herald Tribune

"After 55 minutes of discussion, which can now be heard on the Web sites of the agency and The Times, the then-chairman, William Donaldson, a veteran Wall Street executive, called for a vote. It was unanimous. The decision, changing what was known as the net capital rule, was completed and published in The Federal Register a few months later.

With that, the five big independent investment firms were unleashed....

Over the following months and years, each of the firms would take advantage of the looser rules. At Bear Stearns, the leverage ratio — a measurement of how much the firm was borrowing compared to its total assets — rose sharply, to 33 to 1. In other words, for every dollar in equity, it had $33 of debt. The ratios at the other firms also rose significantly"

Lax oversight, deregulation and fighting regulation seems to be the cause of the credit crunch and economic crisis. If only somebody would post a picture of Obama in a turbin or a link to a video about Obama with ominous sounding music then I could forget all about the facts and go back to blaming the democrats.