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CBWx2

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#60 : March 30, 2011, 10:45:18 PM

Real estate prices were not affected by the CRA.

Did the CRA enable more people to buy homes? Yes or NO?

More buyers=higher demand=higher prices. Eco 101

Either it affect RE prices or it was a completely ineffective and useless law, which is it?

Is this just your theory, or is their evidence to support this? Let me answer that for you. Real estate prices saw their highest appreciation rates in the 70's. The annual appreciation rate was lower in the 80's and 90's, the years following the CRA, than they were prior to the CRA being in place. There was a sharp increase in annual appreciation rates from 1997 to 2005, with the highest increases coming from 2002 to 2005. Coincidentally, or not perhaps, that's precisely the time you started to see the big banks and Wall Street partnering up in their money for nothing schemes.


RE prices have been steadily rising since the early '40s, so your statement that "the yearly increases in real estate did not take effect until about 15 years or so after the CRA was created." is false.

Secondly, I already pointed out more than once, that the CRA was repeatedly amended as was the regulation and execution of the law.

Look up the numbers. As I stated, the annual rate of appreciation was higher in the 70's prior to the CRA being in place than it was in the 80's. So it is not false. Next?

Yes, but to what degree? Like I said, Smith & Wesson makes guns. You can argue the morality of allowing the legal purchasing of weapons designed to kill things, but to say that Smith & Wesson is at fault whenever a murder takes place is a bit of a stretch, even by the harshest of anti-gun advocates standards. Just because the CRA called for a loosening of credit standards does not mean they had anything to do with the means in which banks found to exploit these instruments some 25-30 years later.

You do realize that the CRA is a law and not a person or legal entity like S&W?

If S&W made guns, then advertised them specifically to people with violent natures, then subsidized the purchase of guns by people with known violent histories, then gave them ammo, then pointed out would be victims and said" are you gonna let him look at you like that",  would they be culpable in a murder?

So the CRA encouraged lending institutions to use sub-prime rates on refinances? Because two out of every three loans responsible for the crisis were refinances. So using this logic, the CRA would have been encouraging sub prime refinances and packaging and selling bad loans to foreign investors, correct?
: March 30, 2011, 10:52:31 PM CBWx2


Biggs3535

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#61 : March 31, 2011, 08:49:29 AM

You've said that you are familiar with the CRA, yet your continued posting says otherwise.


spartan

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#62 : March 31, 2011, 01:38:52 PM


So the CRA encouraged lending institutions to use sub-prime rates on refinances? Because two out of every three loans responsible for the crisis were refinances. So using this logic, the CRA would have been encouraging sub prime refinances and packaging and selling bad loans to foreign investors, correct?

Do you know the type of mortgage before the refinance?
Or, why the refinance was done?

CBWx2

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#63 : March 31, 2011, 03:39:20 PM


So the CRA encouraged lending institutions to use sub-prime rates on refinances? Because two out of every three loans responsible for the crisis were refinances. So using this logic, the CRA would have been encouraging sub prime refinances and packaging and selling bad loans to foreign investors, correct?

Do you know the type of mortgage before the refinance?
Or, why the refinance was done?

Does it matter?


spartan

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#64 : March 31, 2011, 04:27:47 PM


So the CRA encouraged lending institutions to use sub-prime rates on refinances? Because two out of every three loans responsible for the crisis were refinances. So using this logic, the CRA would have been encouraging sub prime refinances and packaging and selling bad loans to foreign investors, correct?

Do you know the type of mortgage before the refinance?
Or, why the refinance was done?

Does it matter?

I would say so. I mean, how many of those refinances were people already in sub-primes and trying to get out of an escalation in their payment by going for another (possibly lower) sub-prime? How many were in a mortgage they could afford and refinanced to take "advantage of the equity" and the only way to meet the higher payment was to get a sub-prime?

To make the claim The CRA obviously had nothing to do with the crisis because most of the foreclosures were refinances is a false logic without knowing the circumstances behind the loan.

CBWx2

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#65 : March 31, 2011, 05:15:39 PM


So the CRA encouraged lending institutions to use sub-prime rates on refinances? Because two out of every three loans responsible for the crisis were refinances. So using this logic, the CRA would have been encouraging sub prime refinances and packaging and selling bad loans to foreign investors, correct?

Do you know the type of mortgage before the refinance?
Or, why the refinance was done?

Does it matter?

I would say so. I mean, how many of those refinances were people already in sub-primes and trying to get out of an escalation in their payment by going for another (possibly lower) sub-prime? How many were in a mortgage they could afford and refinanced to take "advantage of the equity" and the only way to meet the higher payment was to get a sub-prime?

To make the claim The CRA obviously had nothing to do with the crisis because most of the foreclosures were refinances is a false logic without knowing the circumstances behind the loan.

So the easier thing to do is to just assume that they are all lower-income borrowers? I know some wish to do that because it fits into the framework of their "the public sector is always to blame, the private sector is never to blame" world view. But the reality is that the CRA does not audit refinances, and two out of every three sub-prime loans made were refinances. The only people that are in denial that predatory lending practices are mostly at fault for the crisis are the right wing kool-aid drinkers. People weren't refinancing into sub-prime loans at this record pace prior to banks figuring out ways to make a ton of money off of them via the "money for nothing" scam. If it looks like a duck, etc., etc.


John Galt?

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#66 : March 31, 2011, 06:59:10 PM


So the CRA encouraged lending institutions to use sub-prime rates on refinances? Because two out of every three loans responsible for the crisis were refinances. So using this logic, the CRA would have been encouraging sub prime refinances and packaging and selling bad loans to foreign investors, correct?

Do you know the type of mortgage before the refinance?
Or, why the refinance was done?

Does it matter?

I would say so. I mean, how many of those refinances were people already in sub-primes and trying to get out of an escalation in their payment by going for another (possibly lower) sub-prime? How many were in a mortgage they could afford and refinanced to take "advantage of the equity" and the only way to meet the higher payment was to get a sub-prime?

To make the claim The CRA obviously had nothing to do with the crisis because most of the foreclosures were refinances is a false logic without knowing the circumstances behind the loan.

So the easier thing to do is to just assume that they are all lower-income borrowers?

Where in Spartan's post did he use the word "all" or any other superlative? You are the one that keeps posting "all or none" claims.



I know some wish to do that because it fits into the framework of their "the public sector is always to blame, the private sector is never to blame" world view.

again, no one but you is using superlatives like "always" and "never". Everyone else is just saying that subprimes did have some impact and that the CRA had some influence.


But the reality is that the CRA does not audit refinances, and two out of every three sub-prime loans made were refinances.

Who said the "Community Reinvestment Act audits anything? Just you. The rest of us realize that the CRA is a law, words written on a piece of paper, and not a regulatory body or govt. entity.


The only people that are in denial that predatory lending practices are mostly at fault for the crisis are the right wing kool-aid drinkers.


You are the ONLY one that brought up lending practices. Even the article you posted in the OP did not mention it once.

that more than half of the Sub Prime mortgages that cause the global financial crisis were from homeowners that would have qualified for normal loans, but were pushed into sub-prime loans by greedy lenders?

http://www.businessweek.com/investing/insights/blog/archives/2008/09/community_reinvestment_act_had_nothing_to_do_with_subprime_crisis.html

You were asked repeatedly:

1. You stated in the thread start and re-iterated here that people were given sub prime loans when they would have qualified for regular loads. I read the article you referenced twice and I did not see that mentioned at all. Please show me where they say that otherwise the premise of your argument is baseless. As I get older my eyesight is going down the toilet so I will accept that I might not have seen it and would welcome the assistance.

So where in that article is there ANYTHING about people that qualified for prime loans being 'forced" into subprimes???



Also, you previously claimed, and again dodged, that subprimes had "no effect on RE prices" but you also posted that 60% of subprime loans were refinances meaning that 40% were for purchases.

Please explain how that 40% of subprimes that were used for purchases "had no effect on prices"


John Galt?

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#67 : March 31, 2011, 07:30:54 PM

Real estate prices were not affected by the CRA.

Did the CRA enable more people to buy homes? Yes or NO?

More buyers=higher demand=higher prices. Eco 101

Either it affect RE prices or it was a completely ineffective and useless law, which is it?

Is this just your theory, or is their evidence to support this?


It is freakin commons sense and basic economics. If the CRA helped more people (lower income people) to buy homes, then it increased demand and therefore prices.
 
If you want a link, then here it is




Let me answer that for you. Real estate prices saw their highest appreciation rates in the 70's.

not inflation adjusted






The annual appreciation rate was lower in the 80's and 90's, the years following the CRA, than they were prior to the CRA being in place. There was a sharp increase in annual appreciation rates from 1997 to 2005, with the highest increases coming from 2002 to 2005. Coincidentally, or not perhaps, that's precisely the time you started to see the big banks and Wall Street partnering up in their money for nothing schemes.


you are completely ignoring, again, the numerous amendments to the CRA in the late 90s, and most importantly the fact that Reagan and Bush Sr. did almost no enforcement of the act. As per the article you posted, "the Bush administration has been weakening CRA enforcement and the laws reach since the day it took office. The CRA was at its strongest in the 1990s, under the Clinton administration"

And strangely, inflation adjusted home prices hit an all time high before 2001



RE prices have been steadily rising since the early '40s, so your statement that "the yearly increases in real estate did not take effect until about 15 years or so after the CRA was created." is false.

Secondly, I already pointed out more than once, that the CRA was repeatedly amended as was the regulation and execution of the law.

Look up the numbers. As I stated, the annual rate of appreciation was higher in the 70's prior to the CRA being in place than it was in the 80's. So it is not false. Next?


What?? you completely dodge the question and then say "next".

One more time:

the CRA was repeatedly amended as was the regulation and execution of the law.

Well???

 the CRA was repeatedly amended as was the regulation and execution of the law.
Yes, but to what degree? Like I said, Smith & Wesson makes guns. You can argue the morality of allowing the legal purchasing of weapons designed to kill things, but to say that Smith & Wesson is at fault whenever a murder takes place is a bit of a stretch, even by the harshest of anti-gun advocates standards. Just because the CRA called for a loosening of credit standards does not mean they had anything to do with the means in which banks found to exploit these instruments some 25-30 years later.

You do realize that the CRA is a law and not a person or legal entity like S&W?

If S&W made guns, then advertised them specifically to people with violent natures, then subsidized the purchase of guns by people with known violent histories, then gave them ammo, then pointed out would be victims and said" are you gonna let him look at you like that",  would they be culpable in a murder?

So the CRA encouraged lending institutions to use sub-prime rates on refinances? Because two out of every three loans responsible for the crisis were refinances. So using this logic, the CRA would have been encouraging sub prime refinances and packaging and selling bad loans to foreign investors, correct?
[/quote]


No, the CRA encouraged/forced banks to make more loans in low income neighborhoods and all of those loans were for purchase. More loans means prices in those riskier neighborhoods rose more than they would have without the CRA.

It is the most basic concept in economics---more buyers=higher prices. The CRA created more buyers-period!


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#68 : March 31, 2011, 08:17:08 PM

The bank became risky investors when Bush 2 repealed the Glass Steagel act which was enacted after the Great Depression #1 in 1930s.  That act prevented banks from investing bank funds in the stock market.  The reason was they found that bank investing had contributed to the downfall of the banks in '29.  With bank illiquidity, there was no cash available for jobs, business investing etc.  plus they lost the confidence and credibility  of the Americcan people.

This was one of the major contributing factor to both depressions then and now.  Not the only  one certainly.

Lessening of regulation and lack of oversight throughout the SEC, FINRA and banking as well as insurance led to the death of the housing market and the rest.   Using Bernine Madoff as an example.  Do you know that in all the years Bernie Madoff was operating HE DID NOT PURCHASE A SINGLE SECURITY?


Ladyfan

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#69 : March 31, 2011, 08:20:54 PM

(sORRY  I did a 'funny button')  to continue....

Wouldn't you think over a twenty year period someone in the SEC would have noticed?  That, is a beyond gross lack of oversight.  Enron and other companies serve as further examples.

Then add the greed factor that draws even wealthy people into deep morality failings.....and stir it with misinformation and a poor understanding by the general public of how these financial enitities operate and you have 'it'.....our recent Depression. 


Biggs3535

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#70 : March 31, 2011, 08:22:39 PM

The bank became risky investors when Bush 2 repealed the Glass Steagel act which was enacted after the Great Depression #1 in 1930s.

President Clinton signed the repeal on November 12, 1999.  Neither Bush had anything to do with it.


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#71 : March 31, 2011, 08:45:52 PM

And both Clinton and Bush tried to rein in the CRA - unsuccessfully.  Has anyone mentioned Chris and Barney lately?

\"A Great Coach has to have a Patient Wife, A Loyal Dog, and a Great Quarterback. . . . but not necessarily in that order\" ~ Coach Bud Grant

CBWx2

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#72 : March 31, 2011, 10:21:28 PM

Is this just your theory, or is their evidence to support this?

It is freakin commons sense and basic economics. If the CRA helped more people (lower income people) to buy homes, then it increased demand and therefore prices.
 
If you want a link, then here it is

Specific evidence, please. As in, drastic, or even just above average increases in the annual appreciation rates after the law was signed. The reason you have no evidence of this is because there isn't any. Even though more people were buying homes, more homes were being built, therefor, the influx of new home owners was matched with an influx of new homes to purchase. For the most part, they offset one another.


Let me answer that for you. Real estate prices saw their highest appreciation rates in the 70's.

not inflation adjusted






The annual appreciation rate was lower in the 80's and 90's, the years following the CRA, than they were prior to the CRA being in place. There was a sharp increase in annual appreciation rates from 1997 to 2005, with the highest increases coming from 2002 to 2005. Coincidentally, or not perhaps, that's precisely the time you started to see the big banks and Wall Street partnering up in their money for nothing schemes.


you are completely ignoring, again, the numerous amendments to the CRA in the late 90s, and most importantly the fact that Reagan and Bush Sr. did almost no enforcement of the act. As per the article you posted, "the Bush administration has been weakening CRA enforcement and the laws reach since the day it took office. The CRA was at its strongest in the 1990s, under the Clinton administration"

And strangely, inflation adjusted home prices hit an all time high before 2001

How does this chart not prove exactly what I said? Inflation adjusted prices saw modest growth until about 1997 (1998), with a sharp increase from 2001 to 2005 (2006).

RE prices have been steadily rising since the early '40s, so your statement that "the yearly increases in real estate did not take effect until about 15 years or so after the CRA was created." is false.

Secondly, I already pointed out more than once, that the CRA was repeatedly amended as was the regulation and execution of the law.

Look up the numbers. As I stated, the annual rate of appreciation was higher in the 70's prior to the CRA being in place than it was in the 80's. So it is not false. Next?


What?? you completely dodge the question and then say "next".

One more time:

the CRA was repeatedly amended as was the regulation and execution of the law.

Well???

 the CRA was repeatedly amended as was the regulation and execution of the law.

Show me specifics about these amendments. Because I have looked at them, and there was no expansion into all lending institutions, which you claimed there was, until 1999. As I stated, the changes mostly applied to streamlining the process. There was no expansion of power until 1999.


So the CRA encouraged lending institutions to use sub-prime rates on refinances? Because two out of every three loans responsible for the crisis were refinances. So using this logic, the CRA would have been encouraging sub prime refinances and packaging and selling bad loans to foreign investors, correct?


No, the CRA encouraged/forced banks to make more loans in low income neighborhoods and all of those loans were for purchase. More loans means prices in those riskier neighborhoods rose more than they would have without the CRA.

It is the most basic concept in economics---more buyers=higher prices. The CRA created more buyers-period!

Housing prices increased in Great Britain, Australia, China, Denmark, Spain, and numerous other European and Asian countries in the 2000's. Did the CRA affect those places too?
: March 31, 2011, 10:23:00 PM CBWx2


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#73 : April 02, 2011, 04:41:05 PM

One questions - when the regulatory changes were made that permitted more money to be loaned (and available to loan by the banks) - in 1999 - the spike in US home prices is pretty clear.  So why do you think this happened?  Simply because banks were unfettered to an extent?  Or do you see where guidelines on lending were revised allowing (and insisted upon in some ways by Congress) that lead to the bubble growth and then the bust? 

I am not aware of the circumstances in other countries, but I can pretty clearly see the impact made by Congress on banks, creating the situation that led to the bubble.  And I can see fairly clearly where the expansion of buyers followed the easy credit made available.  I don't see anyone pointing exclusively at the CRA - but I do see folks making rational points trying to explain that the CRA was indeed a solid contributor - along with banks, lending institutions, Congress and Wall Streets contribution by expanding funds available. 

\"A Great Coach has to have a Patient Wife, A Loyal Dog, and a Great Quarterback. . . . but not necessarily in that order\" ~ Coach Bud Grant
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