Freepers and Bigots touting the CRA for the markets demise.

[FreakinDJ]

Why are Freepers and Bigots touting the CRA for the markets demise.

From what I can see it is merely a “Rating System” which has no real teeth.

The 1978 CRA regulations focused CRA examinations on factors related to the process used by institutions to determine the credit needs of their community and to their responses to those needs. The evaluation of an institution's performance was based on the application of twelve assessment factors, including the ascertainment of community credit needs, marketing and the types of credit offered, the geographic distribution of loans, the record of opening and closing branches and providing services, participation in local community development projects, and the financial and legal capability of the institution. To avoid allocating credit, and to allow for creativity by institutions in meeting the varying credit needs of their localities, these regulations did not require specific products to be offered or attempt to prescribe any particular required level of lending. Further, all covered institutions were subject to the same set of rules and assessment factors, without differentiating based on size or location.
http://www.federalreserve.gov/newsevents/testimony/braunstein20080213a.htm

But then we have 1 of our favorite Bigots touting the CRA was the demise of Wall St. When I actually read through his babble about those “Undeserving Minorities” who need a loan to buy a house. The only “Real Teeth” of the CRA Law he cites is

if a bank wants to make virtually any change in its business operations — merging, opening up a new branch, getting into a new line of business — it must first prove to regulators that it has made "enough" loans to the government's preferred borrowers. The (partially) tax-funded "community groups" like ACORN (Association of Community Organizations for Reform Now) can file petitions with regulators that stop the bank's activities in their tracks, perhaps defeating them altogether. The banks routinely buy off ACORN and other "community groups" by giving them millions of dollars as well as promising to make even more dubious loans.

http://mises.org/story/2963

Does anyone here think these “Petitions” carry any weight at all with the regulators

BTW: The Bigot of the Day Award goes to...

[Warpy]

1. Those people get everything bassackwards

All those things did in Boston was to open up redlined districts to gentrification.

[KharmaTrain]

2. The Talking Point Of The Day

I first caught it on Friday...test ballooned on hate radio...and now it's going "mainstream".

This is GOOP codetalk that covers several points at once...a way to hide their blatant racism with some "legal" underpinning.

Remember, the wingnuts are getting desperate out there. The last sink they're sure to throw is the race card...and almost everything from here on out will have those overtones. This is hate radio fodder cause the asshats can lie and revise history to rev up their sheeple...

What's interesting to see is the rift this mess created within the GOOP. How will they react now that they've learned Gramps threw them under the bus....

[Wilber_Stool]

3. If i'm not mistaken

the CRA only involves commercial banks and they are relatively sound. Besides, the system ran just fine from 1977 to 2001.

[TriplD]

4. I think "Community" is now some racist code word

since Rudy Giuliani and Sara Palin mocked Obama as a "community organizer" at the GOP convention.

CRA is a government regulation, it has "Community" in it's name, and helped stem the urban decay caused by redlining. The perfect right-wing scapegoat.

They are completely mischaracterizing the CRA regulation to do this though. For one, it only applies to Banks, not the mortgage brokerages that got us into trouble. It's just a rating system, the only penalty for non-compliance is a "poor" rating and public shame. Nobody is forced to make loans to poor people. Banks are assessed by how they measure up to other banks in serving low to moderate income census tracts, not individuals.

And the "Clinton era" CRA amendment regarding subprime mortgages refered to in the RW talking points required banks to track which percentage of loans to these communities were subprime, before this they weren't differentiating between prime and subprime loans. Since subprime loans are frowned upon by the Fed this acted as a deterrent to padding their reported lending to LMI assessment areas with subprime loans.

In other words, with the exception that a poor rating will effect your ability to merge with other banks, the RW talking point scapegoating CRA are completely bogus.

[FreakinDJ]

5. How does a "Petition" affect ability to Merge with other banks

Again from what I am reading the "Petition" has no real teeth either. It serves merely as an advisory rating. No penalties, no requirements, nothing "By Law" comes from it.

It is purely at the "Regulator's Discretion" to accept or deny the Bank merger

[TriplD]

6. You're right...

In theory the regulators would take into account any objection to a merger, in reality unless there's some huge public outcry, it probably has little to no effect on the fed's decision.

A "poor" CRA rating does restrict some of what banks can do under some laws. For example they can't form a financial holding company under the Gramm-Leach Act:
http://banking.senate.gov/conf/craamd.htm



This is beside the point though - for the RW talking point theory to be correct those banks with "outstanding" CRA ratings, who, under their theory lent to poor people to achieve a good CRA rating, would be the one's crashing. This isn't the case. If fact, to achieve an "outstanding" rating, one of the things a bank would need to do is show that they relied less on sub-prime lending than their competitors.


Contrary to the RW talking points, CRA was responsible for keeping Banks from over-relying on sub-prime loans thanks to the Clinton era CRA amendment that made banks report prime and sub-prim loans separately.

[ThoughtCriminal]

7. And where is their data?

Notice how these right-wing rants have zero data to back the claim?

This study KILLS this moronic, racist talking point:

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

"Our study concludes that CRA Banks were substantially less likely than other lenders
to make the kinds of risky home purchase loans that helped fuel the foreclosure crisis."