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dbucfan

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: September 22, 2009, 05:42:55 PM

http://www.washingtonexaminer.com/politics/Democrats-on-path-to-repeat-housing-disaster-8275069-60060902.html

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[Print]            Democrats on path to repeat housing disasterBy: BYRON YORK Chief Political CorrespondentSeptember 22, 2009(Photos.com)With all the attention paid to the health care battle, ACORN, and the president's "Full Ginsburg" appearances on five Sunday talk shows, few people noticed a hearing with an exceedingly boring title -- "Proposals to Enhance the Community Reinvestment Act" -- held last week in the House Financial Services Committee. But the session marked a key moment in the ongoing battle between Republicans and Democrats over what caused our current financial woes -- and how we might best avoid getting into the same trouble again.At the hearing, and in others across Capitol Hill, Democratic majorities are pressing hard to expand some of the very policies that led to the reckless home lending that in turn helped lead to the great financial meltdown. If Chairman Barney Frank and his fellow Democrats have their way, we'll do it all again -- and more.At issue last week was H.R. 1479, the Community Reinvestment Modernization Act of 2009, sponsored by Democratic Rep. Eddie Bernice Johnson. It would expand and strengthen the 1977 Community Reinvestment Act, which required banks to make loans in low-income areas that many lenders had traditionally shunned.After the meltdown, some conservatives blamed the CRA for almost solely causing the crisis by requiring banks to make risky loans to unqualified borrowers. It was an unfair charge. "CRA had at best an incremental role in the U.S. housing debacle," says J.D. Foster, an economist at the Heritage Foundation. But CRA did help create the conditions in which disaster could occur.The problems began in the 1990s, when Congress made it harder for lenders to do business if they had not passed the CRA "exam" -- that is, if they had not met the government-imposed standards for loans to low- and moderate-income borrowers."From 1995 on, there was an incredible push by the Clinton and Bush administrations in every way they could -- CRA, Fannie Mae, Freddie Mac, and other ways -- to increase the homeownership rate," says Russell Roberts, a professor of economics at George Mason University. "What that did was to push up the price of housing, and that made it imaginable to lend money to people you never would have lent money to, on terms you wouldn't have done before."In particular, Fannie Mae began to aggressively promote homeownership using the Community Reinvestment Act to give loans to people who couldn't afford them. Fannie went to bankers and said, make as many CRA loans as you can; we'll buy them and take them off your hands. "Our approach to our lenders is 'CRA Your Way,' " top Fannie executive Jamie Gorelick told the Mortgage Bankers Association in 2001. "Fannie Mae will buy CRA loans from lenders' portfolios; we'll package them into securities; we'll purchase CRA mortgages at the point of origination. ..."Fannie promised to buy billions and billions of dollars worth of CRA loans because it was under pressure to do so from the Department of Housing and Urban Development, which in turn was under pressure from Congress, which set ambitious quotas for low- and moderate-income loans.The policy ended in a lot of people losing their homes. Now, Johnson's bill would ensure more of that by applying CRA's lending requirements not just to banks but to non-bank institutions like credit unions, insurance companies, and mortgage lenders. It would also make CRA explicitly race-based by, in Johnson's words, "requiring CRA exams to explicitly consider lending and services to minorities in addition to low- and moderate-income communities."Republicans on the Financial Services Committee strongly oppose the plan. "Instead of looking to expand the number of institutions that must abide by CRA regulations, I think we should reassess the role this and other government mandates played in the financial collapse and consider scaling it back," California Rep. Ed Royce said at the hearing.In private conversation, other Republicans were more emphatic. "There is clearly arguable evidence that the CRA is at the root of this financial meltdown," said one GOP committee member. "So what do they do? They try to expand CRA."That's an overstatement of CRA's role in the housing mess, but it's right about the Democratic plan. Denying that CRA, Fannie and other institutions played any role in setting the stage for disaster, they're proposing more of what helped get us into trouble in the first place. It's no way to fix the problem.Byron York, The Examiner's chief political correspondent, can be contacted at [email]byork@washingtonexaminer.com. His column appears on Tuesday and Friday, and his stories and blog posts appears on www.ExaminerPolitics.com ExaminerPolitics.com.

\"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

Skull and Bones

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#1 : September 22, 2009, 05:47:37 PM

they got away with it the first time so why wouldn't they try again.


Loose cannon

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#2 : September 22, 2009, 06:02:26 PM

 [banghead] Did you even read this article? I liked the line that said 'from 1995 on there was a push by Clinton and BUSH administrations every way they could to increase the home ownership rate"

Last I checked Bush was a republican so dont try to blame everything thats bad on Clinton without calling out your boy W.

dbucfan

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#3 : September 22, 2009, 06:17:26 PM

LOL Loose Cannon - don't get hung up on who is responsible - both parties are - the point is how do they do down the same damned path again?  I have libertarian leanings, I tend to like a lot of Republican views - but it doesn't stop me for outright outrage when they produce candidates such as McCain - and Bush.  Just as I am stunned by Obama's ascension from Chicago Community Organizer to President - or what anyone ever saw in Al Gore that would make them think he was more qualified than the paperboy.

There is a history to this Country, there are competent folks in this Country, and there are honest people in this Country.  We need them to step up and lead - towards independence from our Government, and rather than paying off its' enemies - put its' foot on their throats - and push. 

Don't get hung up on the party - get hung up on it is YOUR GOVERNMENT

\"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

kevabuc

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#4 : September 22, 2009, 06:30:01 PM

[banghead] Did you even read this article? I liked the line that said 'from 1995 on there was a push by Clinton and BUSH administrations every way they could to increase the home ownership rate"

Last I checked Bush was a republican so dont try to blame everything thats bad on Clinton without calling out your boy W.


I don't see where anyone is putting it all on on Clinton. The title of the article merely reflects the affiliation of the party that "currently" is supporting the expansion of the CRA.

The CRA is only one leg of the problem stool of the housing crisis. The CRA is merely the "stick" in this problem whereas Fannie Mae and Freddie Mac, the other two legs of the stool, are the "carrots" in the equation. Bush did at least pay lipservice in trying to rein in Freddie and Fannie and the vast amounts of fraud involved with both organizations.

Perhaps you should do a little better reading yourself.

\"The budget should be balanced; the treasury should be refilled; public debt should be reduced; and the arrogance of public officials should be controlled.\" -Cicero. 106-43 B.C.

MrFreakinMiyagi

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#5 : September 22, 2009, 07:24:56 PM

[banghead] Did you even read this article? I liked the line that said 'from 1995 on there was a push by Clinton and BUSH administrations every way they could to increase the home ownership rate"

Last I checked Bush was a republican so dont try to blame everything thats bad on Clinton without calling out your boy W.

What lead you to believe that the op was placing the blame soley on the democrats?

Dolorus Jason on a ban bet with me over the BCS Championship: \"You have your bet. I ain\'t scurred.\"- 12/8 \"Youre being banned from your own stupidity. Enjoy.\"-12/8 \"Prepare for your ban .\" -12/9 \"Miyagi gonna be banned.\"-12/9 \"Best bet I ever made ...\"-12/9 \"Miyagi mad , gettin banned.\"-12/9\"You mIght need a break from the board. Our bet should help you do just that.\"-12/10 11:38 AM
 \"The bet is off now.\"12/10 1:24 PM
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