CRA is no different. In its origins it was and still is a vital part of a healthy banking diet.
Special interest groups and government agencies alike have abused CRA in a most reprehensible fashion. If it were left to its original intention to serve the underserved under the same prudent lending values that FHA is mandated to follow it would not be in the sorry shape it is in. It is no parties fault , period !

We don’t have a value problem in our Real Estate assets, we have a VALUES problem.
CRA didn’t get us off track, it is the abuse of it that did. Fannie and Freddie and the model that they operate with didn’t screw us up either. It is the abuse of the GSE’s that did. Had we reformed these institutions with programs that reinforced the core values rather than left them solely to the devices of the free markets ( and that is coming from a conservative Republican) we would not be in this mess. If a CEO isn’t the keeper of the corporate culture he or she is never going to be able to protect or promote its share price. We need to restore the cultural values of these entities, not beat them down. Partisan politics has no place in this debate over the location of the smoking gun of the current financial crisis. We have been drinking from the punch bowl until we have puked. Obama has an ACORN problem no question about it. If you didn’t play by ACORN’s rules your banking acorns got the squeeze. McCain was lazy and uninformed and could have pushed harder for reform. Had he known we would be anti Fannie and Freddie like we are at the moment I bet he wouldn’t have the campaign manager he has.
We have all had our part in the spiking the punch and we need to face the hangover and choose healthier habits.

Stuart Brown cmps

If you go out to Leesburg on the Greenway and you drive around, it’s hard to swing a cat in those new sub-divisions without hitting a house that was financed by one of these snazzy new loans (who could afford to buy otherwise?). Most of those homeowners/debtors, by the way, are not low-income, nor minority. And many of them are facing foreclosure. Again, CRA is not relevant. Where is the logic? Community organizers pushing local banks to lend in poor neighborhoods have 0 influence on investment banks or the capital markets. Can you really argue otherwise with a straight face? It would be nice if the current problems were all the “poor peoples” fault, but that just won’t wash.

I dare you to publish this comment on your “group-think” blog. M. Torrens

CRA Community Reinvestment Act
Is a federal law that requires banks and thrifts to offer credit throughout their entire market area and prohibits them from not giving loans to poor areas within their communities.
Violations of this act is called “redlining”
The purpose of this act is to provide credit and homeownership to underserved
Passed in 1977 by Carter (pushed by ACORN
Enforced by the fed government
Sub prime loan/mortgages
Loans with greater risk for various reasons (no money down, no capital, no interest loans, etc).
Fannie and Freddie
Companies that were buying up sub prime loan for more assets on the books. There was nothing stopping this practice and nothing about it that was helping them help others own a home.

1977 CRA passed by Congress under Carter as a result of national grassroots groups like ACORN for affordable housing for the poor aggressively opposed by banking community.

1995 Janet Reno (during Bill Clinton’s administration) and office of housing and urbin development the implementing regulations on the law were strengthened. They used the force of law to make the banks make these bad loans. The changes made at this time were very controversial. Clinton would brag about the increase in home loans.

1997 Bear Stearns –the first securitization of CRA loans started with Bear Stearns.

2003 Bush administration recommended the most significant regulatory overhaul in the housing financial industry over a decade. To move governmental supervision of 2 of the private agents guaranteeing CRA loans under a whole new agency–more oversight power more auditing power. Better chance for Fannie May and Freddie Mac to capitalize their debt. BUT that legislation was BLOCKED in 2003 in congress by the democrats because they were with ACORN and other grassroots groups whom Barack is quite familiar. Baney Frank made a statement that Freddie and Fanny were fine even though they were not. Republicans made statements that there was mismanagement and there were warnings that congress had to take pre-emptive action. Conservative republican senators suggested removing the government’s ties to Fanny and Freddie to have Wall Street realize the significance of the state of these 2 companies. Barney Frank, “these 2 entities Fanny May and Freddie Mac are not facing any kind of financial crisis, the more pressure there is on these companies the less we will see in terms of affordable housing. ““ I don’t think we face a crisis. I don’t think we have an impending disaster.” Many republicans stood up to speak that there were problems ahead, wanted to extricate the government from the two companies and/or have more oversight and regulations on them.

2004 Barney Frank again, “I think Wall Street will get over it (meaning the possible collapse of Fanny & Freddie)”

2005 Republicans and congress offered legislation to basically do what the Bush had to offer. In July, 2005, Harry Reed (democrat majority leader), “The legislation from the Senate banking committee passed today on a party line vote by the republican majority includes measures that could cripple the ability of fannie mae and Freddie mac to carry out their mission of expanding home ownerships. While I favor improving oversight by our federal housing regulators, we cannot pass legislation that could limit Americans from owning homes and potentially harm our economy in the process.”

2006 There were arguments on reducing regulations. Nov 1, 2006: A piece written by Chuck Schumer & Michael Blumberg mayor of New York in Wall Street Journal, “with the benefit of hindsight the Sarbains Oxley act of 2002, which imposed a new regulatory framework on all public companies doing business in the US also needs to be reexamined. Since it’s passage, auditing expenses for companies doing business in the US have grown far beyond what anyone had anticipated, of course we must not in any way diminish our ability to detect corporate fraud and protect investors but there appears to be a worrisome trend of corporate leaders focusing inordinate time on compliance minutia rather than innovative strategies for growth for fear of facing personal financial penalties from overzealous regulators.”

2007 August 16, Chuck Schumer and Dod called on Fannie and Freddie regulators to lift the portfolio caps to allow them to buy more (mostly subprime) mortgages to calm the financial markets. They began to push for LESS regulation.

TODAY:
Chuck Schumer today (only months later): “Eight years of deregulatory zeal by the Bush administration, an attitude of the market can do no wrong have lead us down the short path to economic recession. From the unregulated mortgage brokers to the opaque credit default swaps market to aggressive short sellers who were driving down prices of even healthy institutions based on innuendo. This administration has failed to take the steps to protect…”

We are nationalizing business and subsidizing business.
As much as 1 trillion dollars may be needed to avoid an immediate meltdown.
This is not a result of capitalism and free market.
The banks were forced to give out these loans (or mergers and acquisitions would be at stake).
Fannie Mae and Freddie Mac were buying them up for assets.
This mess was not the private sector. This is called socialism.
Regulations to oversee Freddie and Fanny were rejected by democrats.
Barack Obama is with ACORN, a grassroots organization that pushed for the extreme risky loans.
The plan to fix this is to nationalize businesses, subsidize and now set up a trust.
The no good loans will be dumped on the taxpayer to save those businesses who were forced to make these sub prime loans by the very people who are saying they will save us.
Jim Dimint, “what we need now.. pro growth policies..”

marklevin.show@citcomm.com