Cry CRA and Let Slip the Dogs of Deregulation
Tim Westrich ads additional debunking of the “blame the CRA” myth. He also makes this observation:
Moreover, the Bush administration could have taken steps in this decade to further regulate subprime mortgage practices. It wasn’t until July 14 of this year that the Federal Reserve finally cracked down on “unfair, abusive or deceptive home mortgage lending practices” and restricted “certain other mortgage practices,” power given to it under the Home Ownership and Equity Protection Act of 1994. The Fed finally prohibited practices that they had ignored for years, such as so-called “stated-income loans,” in which the lender makes a loan without verifying a borrower’s ability to repay from income and assets, or charging exorbitant prepayment fees.
And even more generally, nobody from the Bush administration said or did anything all throughout 2003, 2004, and 2005 as the housing bubble was building. Not so much, in this case, out of ideological zeal but simply because it was in their political interests to go along with the idea that everything was fine and these increases were sustainable.
31 Responses to “Cry CRA and Let Slip the Dogs of Deregulation”
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September 30th, 2008 at 7:06 pm
Clearly what started this whole problem was the Voting Rights Act of 1965, which allowed all them danged black people to vote in the South, and elect black Congressmen and Senators, and then, before you know it, they wuz stealing $700 billion worth of housing with their damn CRA. It’s a plot by LBJ, I tell ya. You just gotta know how to see it.
September 30th, 2008 at 7:15 pm
Without white racism, the Republican party would cease to exist as an electoral force. It’s all they got. It might be enough to win
September 30th, 2008 at 7:27 pm
Actually, Bush continually harped on the increasing number of American home owners as evidence of the strength of the economy. It was part of his “the economy is strong and getting stronger” speech. Worst. President. Ever. Period.
September 30th, 2008 at 7:41 pm
“And even more generally, nobody from the Bush administration said or did anything all throughout 2003, 2004, and 2005 as the housing bubble was building. Not so much, in this case, out of ideological zeal but simply because it was in their political interests to go along with the idea that everything was fine and these increases were sustainable.”
He had a decent shot at pushing this onto his successor. Bush is unlucky as well as stupid.
In legacy terms, this is going to be the final nail in the coffin. Goodbye, Truman resurrection. Hello, Hoover.
Can the Dems run against Bush for a generation?
And Obama may be pushing his lucky streak forward a few years.
September 30th, 2008 at 7:46 pm
If the WH wants more D votes for the bailout bill, we ought to hold out for the bankruptcy law reforms trumpeted by the CBC.
September 30th, 2008 at 7:50 pm
Team Sedona’s situation looks utterly helpless at the moment, but one hail mary they could try is using the current situation of complete disorganization among Republicans to deliver a Major Speech separating McCain from Bush.
In ‘68 with a toxic Democratic brand, Humphrey gave a big October speech separating himself from Johnson, and that led him back from a big deficit to make it close in the final weekend…
September 30th, 2008 at 7:59 pm
“Federal Reserve finally cracked down” cept the new ruling take affect October 2009!!
http://www.federalreserve.gov/newsevents/press/bcreg/20080714a.htm
September 30th, 2008 at 8:15 pm
The News Media has been really QUIET about who ran the train off the tracks. There’s a lot of documentation out there that is being ignored by New York Times et al.
Consider, for example , the 109th Republican Congress’s 2006 Joint Economic Report:
—————-
“Over the last several years, the housing and real estate sectors have experienced `bubble-like’ conditions. After increasing rapidly and persistently for a number of years, housing permits, starts, existing and new home sales, and other housing-related indicators breeched new record territory. Real estate prices increased dramatically.
Many economists have predicted a `bubble-like’ adjustment to this run-up in asset prices. Others point out that real-estate `bubbles’ are largely regional and not national in nature. Therefore, there is little the national government can or should do to rectify these problems, aside from maintaining the central bank’s role as a lender of last resort. Additionally, financial firms can better manage risk than was earlier the case. And bank portfolios are in better shape than they were previously. These considerations, together with the fact that the current decline in real estate asset prices has not yet produced the many serious problems pessimists have predicted, has led others (including former Fed Chairman Alan Greenspan) to contend that our real estate problems are mostly behind us. ”
—————
Heck of a job, Brownie.
September 30th, 2008 at 8:27 pm
Has it occurred to anyone that our “Wartime President” has left this country EXTREMELY VULNERABLE to an economic attack?
Anyone out there hear Osama Bin Laden whispering “Wait for it. Wait for it…”
If you see a big order for Puts on the Dow coming from upper Pakistan, head for the hills.
September 30th, 2008 at 9:07 pm
@Don Williams
I’m with you. Although, we’re so broke I don’t know who would want to even be bothered. Maybe we can get Canada to merge with us? I’d love some of that universal healthcare.
September 30th, 2008 at 9:53 pm
The banking system is disintegrating. The Fed has failed with its most important duty. The 1994 regulatory powers pertaining to lending practices have little to do with it. Beyond the lending practices is the fact that hundreds of billions of dollars of dodgy loans accumulated on bank balance sheets, and off.
The foundation of the Feds charter is to insure the quality of bank assets. Greenspan’s Fed actively encouraged the deterioration of bank assets. Bernanke didn’t care or notice, before he became chairman, or after.
The Fed is now using all its resources to help the Treasury establish what amounts to a hedge fund that will benefit a few gigantic banks. Two of which were just last week investment banks and outside of the Feds purview. Even as the Main Street banks face runs and failure.
It’s impossible to overstate the level of systematic failure at the Federal Reserve. All the talk of new regulation doesn’t even rate as a joke, it’s an irrelevancy. The failure was not a series of mistakes but a series of crimes.
September 30th, 2008 at 10:18 pm
Doesn’t the CRA only apply to banks? Lots or mortgages were originated by (non bank) mortgage brokers then sold. Probably the most abusive and exploitive ones, too. I know it’s a waste of time to reason with racist wingnuts, but I guess I do it for my own sanity if nothing else.
September 30th, 2008 at 10:34 pm
Just a note on bank regulation. There are a bunch of different regulatory agencies – the Fed, the FDIC, Thrift Supervision, the Federal Trade Commission to some extent, and the wonderful Office of Comptroller of the Currency. It should be noted that not only did the Bush administration not do anything, it shielded banks from state actions against banks on predatory lending through the OCC. Ask a few State Attorneys General and they’ll tell you this.
Not that bad subprime lending had anything to do with this crisis though, right? They were simply ensuring that the banks wouldn’t be afraid to give out credit, which, of course was a good thing, wasn’t it?
September 30th, 2008 at 10:45 pm
They were simply ensuring that the banks wouldn’t be afraid to give out credit, which, of course was a good thing, wasn’t it?
I honestly can’t tell whether you intended that sarcastically.
Should you have written it in earnest, I will venture to suggest that the Bush administration may have shielded banks from state actions against predatory lending because the financial industry contributed generously to the Republican Party, and not out of any sense of principle.
September 30th, 2008 at 11:23 pm
The current talking point seems to be that in 2004, I think it was, the Republicans introduced legislation to tighten the purchase standards used by Freddie and Fannie, but Barney Frank blocked it. (Because he was corrupted by the n****r Franklin Raines, is the subtext.)
I have not seen anything like a link, but I would be grateful if someone knowledgeable would set out whatever facts this may bear any relation to.
October 1st, 2008 at 1:54 am
“Franklin Raines”
Isn’t that the guy with the O2 tank from The Pretender? He was pretty evil.
October 1st, 2008 at 2:04 am
Re ropc’s comment ” have not seen anything like a link, but I would be grateful if someone knowledgeable would set out whatever facts this may bear any relation to.”
———-
1) The Congress puts out an annual Joint Economic Report (JEP). The 2006 JEP I cited about discussed the subprime problem but the Republicans thought the problem would go away. THe JEP also has a Minority section with the views of Democratic members of the Joint Economic Committee.
2) The 2005 Joint Economic Report, for some reason, seems to have gone missing. It’s not available at Thomas.gov — which has TONS of Congressional reports. But I know it exists because of records at some repository libraries. I hope to look at it later.
October 1st, 2008 at 6:07 am
Matthew needs to read the rightwing blogs more carefully. They accuse the Bush ADministration as being part of the problem because the Bush Administration believed that if it pander to Hispanics enough it could turn Hispanics into Republican voters (see the immigration bill). Bush used the exisiting laws to continue to pander to Hispanics and all the Republicans got was a bigger housing bubble when it collapsed and fewer Hispanic voters than if it would have actually tried being a conservative administration.
October 1st, 2008 at 9:00 am
Banks/companies that are Regulated are not experiencing any econimic crisis, just the investment banks/companies which are not regulated or de-regulated and have no oversight! “One of the regulations meant to keep insiders from driving down the prices of their own company’s stock so that they could sell short at will to make a quick million whenever they felt like it was called the “uptick rule”. The “uptick rule” is another one of the FDR Era regulations which the Heritage Foundations was talking about when they said that they wanted to roll this country back to the days of Herbert Hoover. They succeeded. The Bush administration got rid of this safeguard last year—with predictable results. The uptick rule is fairly simple. ”
http://www.investopedia.com/terms/u/uptick…
October 1st, 2008 at 11:36 pm
Matt says:
“And even more generally, nobody from the Bush administration said or did anything all throughout 2003, 2004, and 2005 as the housing bubble was building.”
Actually, President Bush himself was egging on the housing bubble by attacking down payments as a barrier to minorities getting mortgages. For example, Bush said in 2003:
“The rate of homeownership in America now stands a record high of 68.4 percent. Yet there is room for improvement. The rate of homeownership amongst minorities is below 50 percent. And that’s not right, and this country needs to do something about it. We need to — (applause.) We need to close the minority homeownership gap in America so more citizens have the satisfaction and mobility that comes from owning your own home, from owning a piece of the future of America.
“Last year I set a goal to add 5.5 million new minority homeowners in America by the end of the decade. That is an attainable goal; that is an essential goal. And we’re making progress toward that goal. In the past 18 months, more than 1 million minority families have become homeowners. (Applause.) And there’s more that we can do to achieve the goal. The law I sign today will help us build on this progress in a very practical way.
“Many people are able to afford a monthly mortgage payment, but are unable to make the down payment. ”
http://www.whitehouse.gov/news/releases/2003/12/20031216-9.html
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