Community Reinvestment is code word for O'Reilly as "Helping Minorities".

Yup, it was the banks being forced to give loans to minorities and illegal immigrants that caused this mess. No Doc loans had nothing to do with it. Nosir, not a thing. It's always the minorities who screw everything up, taking away our white birthrights and causing financial distress. </sarcasm>

I don't know who to blame. BillO and other right wing pundits blame CRA and indirectly lazy stupid minorities. Boehner balmes Pelosi. Obama blames the republicans, who passed all sorts of anti goverment, tax cutting, invading soveriegn nations, Enron loopholes, financial market deregulations. It is just so hard to figure out who to blame. I know that once we are sure who to blame, we can then appoint a commission to write a report, others can then read that report and criticize the many innaccuracies and assumptions that went into the methodology. At that point we will all be hunter gatherers again, which is the best way to organize humans, it has never failed in 2.5 million years.

Just when I thought it couldn't get any stupider, along come the right wing phony christian fundies. According to them, it's the gays and lesbians <--(link!) who are responsible for the wall street crisis!

Yeah, it's all because California allowed gays to marry, that's the ticket. </rolling eyes>

Amazing!

This slug has a laundry list of things that we've done to piss God off like allowing abortion, gay marriage etc., but he doesn't see anything wrong with our invading other countries, abandoning the poor in NO or many of the other sins of the last seven years.

I'm just starting to see the tv commercials for the anti-Gay-Marriage prop. here in CA. It features clips of a frightening Gavin Newsom promising that it's here "whether you like it or not!", and the voice-over letting me know that our schools are "teaching" gay marriage, and that "acceptance of gay marriage is mandatory".

Gay marriage MAN-datory?

I don't like the sound of that.

It's the "acceptance" part that has me concerned.

that "of" has me deeply worried.

"of" is pretty bad, I'll admitt that. But really, I think "is" is well far worse when you really look into the issue.

I am a realtor and have seen much of what has been happening.  I can assure everyone that the worst contributors to this situation have been independent mortgage brokers.  They made loans chosen to collect maximum commissions.  They sold people on ARMs at high interest rates when the borrowers qualified for a fixed rate at a lower rate.  They coached people to tell lies they should put on their applications saying that everyone does it and they can't buy a house otherwise.  Also, the brokers lied to the principals funding the loans.  I saw this personally and have also heard the same stories from broker employees.  Last week a former broker employee told me that his boss prohibited him from accepting fixed rate loan applications because the commission was higher on the more exotic loans.

As to the CRA which is getting this heat - there has NEVER been any law or rule that required anyone to make a loan to a financially unqualified applicant.  75-80% of subprime loans have originated from independent mortgage brokers who are NOT governed by CRA rules anyway.  If CRA is at fault, why did it take from 1977 to 2006 for the effects to surface?  We have had at least 3 housing downturns in that time. 

Beyond the brokers, the actual lenders did not do due diligence on the loans that they were funding.  These are the banks and Wall St brokers.  They all just wanted their share of the gravy.

As a realtor/advisor, I tried to refer buyers to reputable direct lenders - not brokers.  However, most people ignored my advice in favor of going somewhere recommended by a friend or relative.

Direct lenders such as banks who want to sell their loans to Fannie and Freddie are subject to stringent standards such as 20% down and rigorous investigation of the borrowers ability to pay.  These are called "conforming" loans.

Good post. 

EXCELLENT post.  Thanks for providing some insight into this crisis from within the industry.  And best of luck in your continuing recovery.  :-)

"Pithaughn" observes:

I don't know who to blame. BillO and other right wing pundits blame CRA and indirectly lazy stupid minorities. Boehner balmes Pelosi. Obama blames the republicans, who passed all sorts of anti goverment, tax cutting, invading soveriegn nations, Enron loopholes, financial market deregulations. It is just so hard to figure out who to blame.

Right Wing Watch explains how the Religiopolitical Right is starting to blame The Homosexual Agenda for the imminent collapse of the economy, and that the only salvation therefor would be a Return to Traditional Moral and Family Values:

Last week, we noticed Tony Perkins blaming the current financial crisis on a “breakdown in the family” and the idea that social issues are somehow behind our current economic woes seems to be gaining traction among the Right.

Today, Mat Staver of Liberty Counsel blasted Google’s opposition to California’s Proposition 8 by declaring that it will hurt their bottom line and cited WaMu and Wachovia, which both failed recently, as evidence:

"Google should focus on technology instead of warring against marriage and family values held by the majority of people worldwide," said Mathew Staver, founder of Liberty Counsel and dean of the Liberty University School of Law. "Marriage between a man and a woman is the norm throughout the world. Google executives should be searching for ways to make the Internet more usable rather than promoting a radical redefinition of marriage.

"Companies that promoted anti-family policies have learned the hard way that such policies are bankrupt," Staver continued. "K-Mart learned its lesson several years ago. Washington Mutual and Wachovia, both of which actively promoted the homosexual agenda, have come to realize that anti-family policies will bankrupt the bottom line."

Maybe instead of fighting over a bailout of Wall Street, Congress should just outlaw the homosexual agenda, since that is obviously what is causing our current economic panic.  

But OneNewsNow informs us that there is some good news to come out of all the chaos:

A well-known pastor and author says the current economic crisis facing the United States should be a wake-up call for Americans to turn to Christ.

Dr. Charles Stanley is pastor of First Baptist Church of Atlanta, Georgia, and founder of In Touch Ministries. He says there is no question that America needs a spiritual awakening -- and he believes the ongoing economic woes could cause some in the country to turn to the God of the Bible.

"When God gets a hold of Americans' money -- whatever messes with our money gets people's attention, but we need enough heartache that drives us to God," Dr. Stanley contends.

Now if only Congress would start listening to the Religious Right instead of all those egghead economists and just get Americans to turn to Christ, stop having abortions, and defeat the homosexual agenda, all of our economic problems would be solved.

Such, methinks, is a clear cut example of the old post hoc, ergo propter hoc ("after this, therefore because of this") in action. Which, come to think of it, is rather illogical in and of itself, as it blames current developments on a selective reading of past history without regards for deeper context.

The banks did not stop at that.

They mixed the bad loan they gave (to avoid punishment no less) with a good loan they gave and sold the combined loan to someone else.

Now, where were the regulations that required them, or pusished of they did not, to do it?

Simply, they were using regulations to make a quick buck and nothing f'ing apologists like Jacoby, Severin, Graham, say will prove otherwise

I never thought I'd hear O'Reilly say this...

“It gets me angry,” said O’Reilly. “I do talk radio and most talk radio is conservative-dominated ideologues; Kool-Aid drinking idiots. Idiots. Screaming at you that this is socialism, this is this, this is that. ‘It’s Clinton’s fault.’ It’s Clinton’s fault? He hasn’t been in office in 8 years. It’s Bush’s fault! It happened under Bush’s watch.”

But then O’Reilly’s tirade seemed to aim at Rush Limbaugh-without actually naming him.

“But let’s get back to this talk radio stuff,” said O’Reilly. “These idiots. I mean, they’re misleading you. They’re lying to you. They’re rich, these guys. Big cigars. All of that. ‘Yeah, oh yeah, my private jet!’ And they’re saying, ‘Oh, no! No bail out!’ Uh, uh, no way!

“Hey! You’re going to get it, not them!” O’Reilly continued. “That foreign investment pulls out, we are toast! And they’ll pull out if this bailout doesn’t happen. Are you getting the message here? Walk away from these liars, these right-wing liars. Walk away from them! They’re not looking out for you.” 

I was listening to M. Rotten Levin's radio pukefest the other night, and he played the audio of what you posted.  Levin then went on to call O'Reilly some of the worst things you can say on radio short of George Carlin's "Seven Words".

We're starting to see the right-wing talkers devour each other.  It's gonna be fun to watch, so make sure ytou have plenty of popcorn.

what kind of wine goes with popcorn? ;)

"what kind of wine goes with popcorn? ;)"

Cheer Wine...what else?  <G>

stinkin' elitists.

I haven't even been able to look at a glass of wine for more than forty years because of my days drinking Thunderbird as a teenager.

Thanks for the memories Colonel.  

So you wear a blindfold when you drink?

WOW-EEE, Col., thanks for the pictures. We always joke about Thunderbird and Night Train wine.  When i started using the stage moniker, "Mad Dog", some of my friends just called me "20-20".  On a "Jazz Fest" visit a couple of years ago, my son bought some Thunderbird and Mad Dog 20-20 wine for me to display at home.  I dare not drink it.  

Many years ago I worked three jobs after my military service.  One was with my then father-in-law at his TV sales and repair shop, another at an all-night drive-up liquor store (the midnight to 8am shift).  During the day certain customers would come be the shop claiming they didn't have the cash to pay the monthly bill for their TVs.  Later, around 2 or 3 in the morning, these same folks drove up to the window of the liquor store for their nightly bottle of Night Train or Thunderbird.  Imagine their discomfort at seeing ME behind the window!  We had a big laugh about that.  I always promised I wouldn't tell my father-in-law.  (Usually bored out of my mind, I spent most of the wee hours eating pickled eggs from a 5 gallon jar.  De-licious!)

Why did it take so long? IF r-w radio was/is a free market this type of tearing down the competition should have been heard all along.

Bill's reaching out to a more thoughtful audience...

He's not just your run-of-the-mill bloviating, conservative moron.

However, he is still a dumbass.  Which is on full display with his CRA vendetta. 

Wow! He called them liars? He is right, of course. Just Google Bush + home ownership and you will see who was pushing what. The whole premise of Freddie Mac is -- and over thirty years of experience had shown -- that low income families are not poor credit risks. But racism and class warfare are so much easier.

Apaprently Bill was on Imus this morning pimping his new book.

I guess those pundits forgot about the Commodity Futures Restoration Act of 2000, with the Enron loophole, and the Gramm-Leach-Bliley Act, which repealed the Glass-Steagel Act, and deregulated the banking industry. If anybody is to blame, it's Phil Gramm.

If anybody is to blame, it's Phil Gramm.

And since Phil Gramm's wife was on the Board of Directors at ENRON, he's got blood all over his grubby little hands.

On the right wingnutz websites (such as Newsbusters) for the past few months folks have been pushing this idea.  It's crazy to think that a 1977 law caused a 2008 residential mortgage meltdown.

For example, the Fannie and Freddie "sub-prime" loans were (and this is important) full doc - no stated income program.  And they were fixed rate loans - often at below market rates.  Some were 30/40 (or 40/30) loans - payments were interest only for 10 years and then rolled into 30 years amortization 30 year term.  That's a heck of a loan if it's a fixed rate product!

Here is an excellent blog entry on this issue:

http://www.businessweek.com/investing/insights/blog/archives/2008/09/community_reinv.html

Here's a detailed study of "CRA loan" defaults, etc.:

http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf

And here is a very interesting financial market deregulation timeline:

http://online.barrons.com/article/SB122246742997580395.html

Neil Cavuto just came out and said it on Faux Noise:  What do you expect when you start loaning money to minorities?  Guy must have more sheets in his closet than he does on his beds.

And when did IBD become more conservative than the Wall Street Journal?

Well, Thomas Dilorenzo Professor of Economics at Loyolla College doesn't agree with Gordon or Yellen:

CRA Scam

It is also worth noting that nowhere in the headline does MMfA mention that Clinton revised the CRA in 1994.  Why did he do this and why does the left totally ignore it? 

CATO institute's view

If something Clinton did in 1994 caused this, why didn't it happen in 1995?

"It is also worth noting that nowhere in the headline does MMfA mention that Clinton revised the CRA in 1994.  Why did he do this and why does the left totally ignore it?"

Umm...because it's irrelevant?  Your links don't contain any data that establish a valid correlation between CRA, subprime lending, and default (thanks Newzhound for that CRA foreclosure study - great stuff).

Here's more reality for you to pretend doesn't exist - according to HMDA demographic data the government gathers from mortgage applications, non-minorities comprise 72.5% of subprime borrowers with African-Americans and Latinos coming in at 16.2% and 6.2% respectively.  That 22.4% ties back pretty nicely to Michael Barr's 20% estimate (see?  We're using logic here).

Moreover, 52% of subprime borrowers have incomes ABOVE their area's median income level while 48% are at or below the median.  Based on these data and your implication that the financial crisis should be blamed on subprime borrowers, I have to ask: Why are rich white people destroying America?

Anyway, the Wall Street Journal has a great article called "The United States of Subprime" for anyone with a triple-digit IQ and the desire to acquaint themselves with the actual facts (I'm guessing that this doesn't include you).  Surprise me.

http://online.wsj.com/public/article/SB119205925519455321.html#articleTabs%3Darticle

It most certainly isn't irrelevant.  In early 1993 President Bill Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities. The new rules went into effect on January 31, 1995 and featured: requiring strictly numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to targeted groups to collect a fee from the banks.

The new rules, during a time when many banks were merging and needed to pass the CRA review process to do so, substantially increased the number and aggregate amount of loans to low- and moderate-income borrowers for home loans, some of which were "risky mortgages. Banks set up CRA departments, a CRA consultant industry was created and new financial-services firms helped banks invest in packaged portfolios of CRA loans to ensure compliance. Established and new community groups began marketing such mortgages. The Senate Banking Committee estimated that as of 2000, as a result of CRA, such groups had received $9.5 billion in services and salaries. As of that time such groups also had received tens of billions of dollars in multi-year commitments from banks, including ACORN Housing $760 million; Boston-based Neighborhood Assistance Corporation of America $3 billion; a New Jersey Citizen Action-led coalition $13 billion; the Massachusetts Affordable Housing Alliance $220 million. The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent.

The CRA was public policy that DROVE the market. To cast a blind eye that obvious econic fact and simply blame "the profit motive" is ludicrous.

It is equally ludicrious to blame Wall Street and investment banks when what they did was buy up the risky mortgages that became so prevelant in the market place.

Granted, no one intened to lose money, but, to lay blame on capitalism when the real source of the problem was government in the first place indicates to me a fundamental lack of economic understanding.

Please refer to my earlier post as recoveringrepub.  About 80% of subprime loans made in the last 5 years were made by independent mortgage brokers who are not controlled by CRA.  A large percentage of these brokers were totally dishonest in pursuing the maximum possible commissions.  I know this from personal experience and direct observation and tried to redirect borrowers away from the worst brokers.  The CRA absolutely did NOT drive the market and your ignorant perspective is what is ludicrous.  Also, the real estate boom did not start until more than 10 years after the inception of CRA. No government agency tells their clients lies as has been done by the brokers so who is the problem?  Why don't you give the CRA default rates?

I totally place the blame on greedy capitalism and I know the actual facts on the ground.

President Clinton doesn't agree with you:

Clinton adimits to pressuring Fannie Mae

The CRA opened the door for this mess.  You can spin it anyway you want it, but the CRA was the seed planted that allowed predatroy lenders the avenue to work their magic.  Even Bill has to agree.

When did the fact that if someone committed a crime as far back as the late eighteenth century did it become a reason to excuse a crime in the present. No, no, there must not be any finger pointing because everyone is was or will be guilty of something if we look too closely. This type of argument should not work because it is stupid and childish. It is no different than a child being told that he cannot do a particular thing and he responds with, "But Johnny's mother lets him do it," or "Johnny did it so why can't I." This is what our politicians have come to, spurned on by big business to tell any lie even the flimsiest, the most unjustifiable, and the most ridiculous. Yet this is exactly what they give us. Oh, and forget about the fact that mature minds around the world place the blame for the current crisis on what they call "casino capitalism" as opposed to responsible risk assessments before making investments. Oh yes, and forget the pro forma business accounting that leaves out most of the negatives in order to make their businesses appear fat when the reality is that they are borderline.

this is quite amusing. not one post actually addresses the issue at hand. i wonder why that is.

Which is what?

If you can't afford a home just stop paying your mortgage and the taxpayers will pick up the tab.

<!-- @page { size: 8.5in 11in; margin: 0.79in } P { margin-bottom: 0.08in } -->

H.R. 5334 includes many of my Administration's regulatory relief proposals for depository institutions. The regulatory burden that the Congress has placed on our banking system has reached a staggering level that prevents banks from providing the credit that is necessary to assure economic growth. By reducing the regulatory burden, this bill will assist banks, borrowers, and the economy as a whole.

My Administration worked diligently to craft a compromise housing bill that would target assistance where it is needed most, expand home ownership opportunities, ensure fiscal integrity, and empower recipients of Federal housing assistance.

George H. W. Bush October 28,1992 Statement on Signing the Housing and Community Development Act of 1992

'nuff said.