You know that argument that liberals caused the subprime crisis because they forced banks...

[Cant trust em]

to give loans to people who can't afford them?

Here's your debunking argument.

http://www.federalreserve.gov/newsevents/speech/kroszner20081203a.htm

"These studies found that lending to lower-income individuals and communities has been nearly as profitable and performed similarly to other types of lending done by CRA-covered institutions. Thus, the long-term evidence shows that the CRA has not pushed banks into extending loans that perform out of line with their traditional businesses. "

[Taverner]

1. Logic won't work on those Neanderthals!

They just want an excuse to spew their racist filth...

[Bozita]

3. If it doesn't fit on a bumper sticker, it's just more of that librul 'elite' talk

[imdjh]

4. They don't even have to be racist, it's that the truth is simply too awful for them to handle.

I have repeatedly pointed out that the flood of houses on the market here are largely investor properties held by multiple property owners who simply got caught pyramiding real estate, and when they couldn't get new loans to subsidize their lifestyle, the house of cards started to crumble. And it's not over yet, because there are going to be countless people who bail on leases and landlords as the rental market corrects.

[Taverner]

5. True. I just remember Limpballs blaming minorities for causing the crisis

Saying the banks shouldn't have loaned to them, but the 'evil lib'ruls' made them do it.

[imdjh]

7. And he would say it again today.

The right wingers are firm believers in the "tell a lie over and over and it becomes the truth" model. In fairness, there are some extreme lefties who believe the same thing- some bullshit about controlling the dictionary giving you control of the dialogue.

[rucky]

2. Here's the meat:

Our analysis of the loan data found that about 60 percent of higher-priced loan originations went to middle- or higher-income borrowers or neighborhoods. Such borrowers are not the populations targeted by the CRA. In addition, more than 20 percent of the higher-priced loans were extended to lower-income borrowers or borrowers in lower-income areas by independent nonbank institutions--that is, institutions not covered by the CRA.6

Putting together these facts provides a striking result: Only 6 percent of all the higher-priced loans were extended by CRA-covered lenders to lower-income borrowers or neighborhoods in their CRA assessment areas, the local geographies that are the primary focus for CRA evaluation purposes. This result undermines the assertion by critics of the potential for a substantial role for the CRA in the subprime crisis. In other words, the very small share of all higher-priced loan originations that can reasonably be attributed to the CRA makes it hard to imagine how this law could have contributed in any meaningful way to the current subprime crisis.



I had to explain this to a VP of a mortgage corporation once. I embarrassed the hell out of her, but that's what she gets for repeating talking points so mindlessly, she forgets what she knows.

[Statistical]

6. Your quore doesn't support the claim.

While I don't doubt there is evidence to support your claim you haven't found what you think you found.

"Our analysis of the loan data found that about 60 percent of higher-priced loan originations went to middle- or higher-income borrowers or neighborhoods."

Ok 60% of higher cost loans went to middle income & rich. That doesn't say anything about how much it increased borrowing by poor. It also doesn't break down the failure rates by type of loan & income.

Essentially that quote says nothing.

"Only 6 percent of all the higher-priced loans were extended by CRA-covered lenders to lower-income borrowers or neighborhoods in their CRA assessment areas, the local geographies that are the primary focus for CRA evaluation purposes."

So 6% of higher priced loans went to poor inside CRA. How many outside the CRA? Of that 6% what is the failure rate? How does that compare to the overall failure rate?

while I agree with your premise you have no "facts" in your facts.

[rucky]

8. "High Cost" loans meet a certain criteria.

It's HUD's nice way of saying "predatory lending".

The arugment being that CRA is not correlated to this established "mortgage crisis" indicator, because a clear majority of the loans considered to be contributors to the mortgage crisis were not under CRA mandate - or jurisdiction for that matter.

[Statistical]

10. False comparison.

The rate of "high cost" loans is not important. 90%+ of "high cost" loans are performing.

The rate of delinquency is what is important.
Your conclusion is not supported by the facts.

It is possible that low income make up a small % of loans but large % of delinquencies.
It is also possible that low income make up a small% of delinquencies.
Without knowing the delinquency rate you can't determine the correlation (or if one even exists) between income and delinquency.

Find the rate of CRA delinquencies and you may have something.

[Viking12]

11. Is this what you're looking for...?

We found that delinquency rates were high in all neighborhood income groups, and that CRA-related subprime loans performed in a comparable manner to other subprime loans; as such, differences in performance between CRA-related subprime lending and other subprime lending cannot lie at the root of recent market turmoil.

[Statistical]

14. Now that is it.

I had no doubt it was there.

[rucky]

12. It depends on which end of the mortgage crisis you're analyzing.

On the Wall Street end of things, the paper lost its value because of the lending practices revealed that would increase risk of delinquency. If you're looking for the root cause, high-cost is still your best indicator (and subprime), which are measured here: www.foreclosure-response.org

If you're picking through the bones and measuring the extent of the crisis, you're right on with delinquency.

[Kingofalldems]

9. Republicans posing as blue dog Democrats have always claimed

that Barney Frank bears responsibility.

[Jeff In Milwaukee]

13. To put it more simply....

The Community Reinvestment Act was passed in 1977 -- odd that it took thirty years for there to be a problem. But to be more to the point, CRA applies only to banks, and according to federal regulators, only about 25% of the high risk loans that caused the finacial melt-down were written by banks; the rest were written by lending institutions that AREN'T GOVERNED BY CRA.