Cowboy Capitalism; The Sub Prime Crisis, Community Reinvestment Act and Acorn

[tkdhav]

How about getting out of our life.

[dapawe]

In the mid-2000s the Bush administration exempted small and medium sized banks from the CRA. Yet what happened to subprime lending during those years? They rose at an even faster rate. That, I think, makes it hard to believe CRA was the main driver behind the bubble.

[badfickle]

As usuall Kudlow doesn't know what the heck he's talking about. The CRA did not require all lenders to make loans. Only 25% of all subprime loans were made by lenders regulated by the CRA all the rest were made by private lenders and banks who were not regulated by the CRA. Private lenders wanted to make these loans because they could sell them off to private banks and make huge fees. Plus CRA banks had lower default rates than private lendres. What a tool.

[bobbyb1978]

@badfickle The rest of the lenders sold those packages to 'private companies' like Fannie and Freddie who only bought them because they had a government guarantee.

[badfickle]

@bobbyb1978 actually no. While it's true that the subprime loans bought and held by Fannie and Freddie had government guarantee the large majority of subprime loans had were bought up by private "banks" and made into various derivatives. These mortgages had no federal backing at all. In fact, the large backs gave bonuses to private mortgage lenders who sold subprime loans to borrowers who should have qualified for conventional loans? Why because there was more opportunity for profit.

[mexikong00]

@badfickle Yeah' and those derivatives that had no federal (taxpayers) backing, did in the end game.

[MrSheniah]

@badfickle Yes it did require all banks to make bad loans. The regulations were added onto banks who refused the bad loans. This was just another Marxist move to welcome in Communism. The Democrats are a bunch of Socialists trying to overspend beyond sustainability, so they can create a crisis to usher in Communism. They think they know what is best.. History tells us otherwise. And people should not fall for their strategy.

[jamezbond78]

That was funny watching Art Laffer (the fool) agree the free markets should decide housing prices, while he supports all the bailouts.

[mannyfeseha]

thehelpfund.blogspot

[SeekerNLife]

I know a banker who quit his 6-figure job, over SubPrime Lending.

He refused to do it.

He predicted that it would be a disaster.

He was right.

Community Reinvestment = Socialism

The SubPrime Lending mess is proof, that when you force socialistic programs on Business...it will always end in disaster.

[t0nt01982]

but every american has a RIGHT to a house so that makes the CRA a good thing, regardless of outcome...

[poshknacker]

greed filled with pride splayed and displayed, showing its wares and ruining our lives.

Want a subprime mortgage?

How much do you earn?

150k per annum?

sure we trust you (self ratified contracts) no proof needed.

Heres the cash. Heres the interest rate now lets not worry about the fact that you are poor and have been entrapped.

Next.

oops there goes the economy stoopid!

[poshknacker]

greed filled with pride splayed and displayed, showing its wares and ruining our lives.

Want a subprime mortgage?

How much do you earn?

150k per annum?

sure we trust you, no proof needed.

Heres the cash.

Next.

oops there goes the economy stoopid!