Quote:
Originally Posted by Beta84  OMG!!! You mean Democrats tried to defend the people paying for their campaigns? Isn't that how politics work? Why do you think Obama is trying to eliminate that? It's a terrible system because it screws up your views sometimes, which is extremely unfortunate.
And by the way...Democrats have been in control of Congress for less than 2 years. We were already going under due to the subprimes by the time they took over (and that says Republicans called it in 2003...when they had full control of executive and legislative branches). So pray tell, if the Republicans knew...why didn't they do something during the long period of time prior to that, when they had the ability?
Exactly. Everyone is to blame, or at least it's not 1 specific party...even if some people were actually trying to blow the horn. |
Beta, I don't consider Wiki to be the most reliable source but dates of when laws were passed, and dates changes were made to the laws are pretty factual. Look at this entry and tell me what you see.
Original Act
The CRA was passed by the 95th
United States Congress and signed into law by
President Jimmy Carter in 1977 as a result of national pressure for affordable housing.
[2] In Congressional debate on the Act, critics charged that the law would "distort credit markets, create unnecessary regulatory burden, lead to unsound lending, and cause the governmental agencies charged with implementing the law to allocate credit." In response Congress included little prescriptive detail and gave agencies considerable regulatory flexibility.
[3]
The CRA mandates that each banking institution be evaluated to determine if it has met the credit needs of its entire community. That record is taken into account when the
federal government considers an institution's application for deposit facilities. The Act charged the
Federal Reserve System to implement the CRA through ensuring banks and savings and loans met their CRA obligations.
[2] The CRA is also enforced by the
Federal Deposit Insurance Corporation ("FDIC")
CRA Statute. Community groups only slowly organized to take advantage of their right under the Act to complain about law enforcement of the regulations.
[4][5] Congressional Changes 1989 - 1994
The
Financial Institutions Reform Recovery and Enforcement Act of 1989 (
FIRREA) was enacted by the 101st Congress and signed into law by President G. H. W. Bush in the wake of the
savings and loan crisis of the 1980s. As part of a general reform of the banking industry, it increased public oversight of the process of issuing CRA ratings to banks. It required the agencies to issue CRA ratings publicly and written performance evaluations using facts and data to support the agencies' conclusions. It also required a four-tiered CRA examination rating system with performance levels of "Outstanding," "Satisfactory," "Needs to Improve," or "Substantial Noncompliance."
[3]
According to
Ben Bernanke, Chair of the
Federal Reserve System since 2006, this law greatly increased the ability of advocacy groups, researchers, and other analysts to "perform more-sophisticated, quantitative analyses of banks' records," thereby influencing the lending policies of banks. Over time, community groups and nonprofit organizations established "more-formalized and more-productive partnerships with banks."
[2]
Bernanke also stated that CRA was affected by the
United States Congress passing the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992. This act required the Federal National Mortgage Association, commonly known as
Fannie Mae, and the Federal Home Loan Mortgage Corporation, commonly known as
Freddie Mac, to devote a percentage of their lending to support affordable housing. This in part, contributed to increased Fannie Mae and Freddie Mac pooling and selling of such loans as
securities , (i.e.
securitization), and expanded the
secondary market for those loans.
[2]
In 2000, in order to expand the secondary market for affordable community-based mortgages and to increase liquidity for CRA-eligible loans, Fannie Mae committed to purchase and securitize $2 billion of "MyCommunityMortgage" loans.
[6][7] Clinton Administration Changes 1995
In July 1993
President Clinton asked regulators to reform the CRA in order to reduce paperwork and reward performance.
[8] The CRA regulations were substantially revised and featured requiring 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.
[3]
During March 1995 congressional hearings
William A. Niskanen, chair of the
Cato Institute, criticized the proposals for political favoritism in allocating credit and micromanagement by regulators, and that there was no assurance that banks would not be expected to operate at a loss. He predicted they would be very costly to the economy and banking system, and that the primary long term effect would be to contract the banking system. He recommended Congress repeal the Act.
[9]
Responding to concerns that CRA would lower bank profitability, a 1997 research paper by economists at the Federal Reserve found that "[CRA] lenders active in lower-income neighborhoods and with lower-income borrowers appear to be as profitable as other mortgage-oriented commercial banks".
[10] Speaking in 2007, Federal Reserve Chair Ben Bernanke noted that, "managers of financial institutions found that these loan portfolios, if properly underwritten and managed, could be profitable" and that the loans "usually did not involve disproportionately higher levels of default".
[2]
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