As the economy worsens and Election Day approaches, a conservative campaign that blames the global financial crisis on a government push to make housing more affordable to lower-class Americans has taken off on talk radio and e-mail.Details:
Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.
Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.[emphasis added]
Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height vrom 2004 to 2006.For instance conservatives across the land have been blaming the mortgage crisis on the CRA which was passed in 1977. However:
Conservative columnist Charles Krauthammer wrote recently that while the goal of the CRA was admirable, "it led to tremendous pressure on Fannie Mae and Freddie Mac — who in turn pressured banks and other lenders — to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity."Uh, so I guess Krauthammer and the rest of them blaming the CRA were...wrong?Fannie and Freddie, however, didn't pressure lenders to sell them more loans; they struggled to keep pace with their private sector competitors. In fact, their regulator, the Office of Federal Housing Enterprise Oversight, imposed new restrictions in 2006 that led to Fannie and Freddie losing even more market share in the booming subprime market.
What's more, only commercial banks and thrifts must follow CRA rules. The investment banks don't, nor did the now-bankrupt non-bank lenders such as New Century Financial Corp. and Ameriquest that underwrote most of the subprime loans.
These private non-bank lenders enjoyed a regulatory gap, allowing them to be regulated by 50 different state banking supervisors instead of the federal government. And mortgage brokers, who also weren't subject to federal regulation or the CRA, originated most of the subprime loans.
UPDATE: I added the link to the McClatchy article.
10 comments:
Do you have a link to the McClathy article?
I Googled "subprime mortgage crisis" in "News." Came right up, in several newspapers.
Can't wait to hear what johnk has to say about this. He has, of course, spouted the "blame it all on Carter, Clinton, and the CRA" line.
I should have thought of that. Here is a link I found.
Thanks.
John K: First off the McClatchy papers are liberal in their views. So we have that built in bias. 2nd the CRA forced banks to comply or else face charges of racism from acorn or worse, govt regulators. And Hussein Obama even went to court of behalf of acorn to sue citibank to comply with the cra. Try listening to Jerry Bowyer on the old wptt (cullen is no longer there LOL LOL) 1360 to get the facts straight.
johnk,
You didn't read any of the original post, did you? Predictably, your knee jerked, and you responded: Liberal bias!
Right. So, let me see if I have this straight:
The mean old government forced lenders to make high-interest loans to the poor, and that's the cause of the current crisis?
LOL!!!
SORRY - I'm writing this week's "Jack Kelly Sunday" piece.
I'll add the link to the McClatchy article as soon as I'm done.
Done - link added
John K: Kimber, just concentrate on getting Jive Turkey and Lola Palooza to as many polling places as you can on Nov 4th. And remember Kimber, if you run into opposition just call on some union thugs for muscle.
johnk,
You do seem pretty concerned about "jive turkey" casting a vote. But, tell me.....What makes you think that a voter ID card was issued.
(Let me guess. You think that, just because a form was filled out, in whatever fashion, with whatever name, and whatever address, (let's say, oh, "jive turkey") that a fraudulent vote will be cast.)
Even you can't be that stupid. My guess is that this is just the latest tune you're whistling, as you try to ignore, and get past, the graveyard.
So John K., say specifically which of the claims McClatchy made are false. Ahd share with us how it is a good thing for minorities not to be allowed to buy houses. Is it that you just don't want them to move out of ghettos.
As for the CRA forcing banks to comply, from the McClatchy story:
"_ More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
_ Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
_ Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics."
Those private non-bank firms, like something called Ameriquest and Countrywide, were not subject to the rules of CRA, and in fact not well regulated at all. But they are private businesses, so they can do no wrong in your eyes, and would never hurt anyone (except some little brown people no one cares about).
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