Home
Forums
New posts
Search forums
What's new
New posts
Latest activity
Members
Current visitors
Log in
Register
What's new
Search
Search
Search titles only
By:
New posts
Search forums
Menu
Log in
Register
Install the app
Install
Home
Forums
Brown Cafe Community Center
Current Events
Barney Frank
JavaScript is disabled. For a better experience, please enable JavaScript in your browser before proceeding.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an
alternative browser
.
Reply to thread
Message
<blockquote data-quote="av8torntn" data-source="post: 908798" data-attributes="member: 8259"><p><a href="http://www.cato.org/pubs/journal/cj30n2/cj30n2-12.pdf" target="_blank">http://www.cato.org/pubs/journal/cj30n2/cj30n2-12.pdf</a></p><p></p><p></p><p><span style="font-family: 'NewCaledonia'">"At around the same time in the early 1990s, the regulations underthe Community Reinvestment Act (CRA) were amended to increasetheir influence on bank mortgage lending. The CRA had beenadopted <strong>in 1977,</strong> and initially required that banks make efforts toincrease mortgage lending in all the communities they serve, not justthe communities where middle income or well-to-do families lived.The enforcement mechanism was the withholding of regulatoryapproval for mergers, expansions, or other matters if a bank had notshown that it was working to achieve the CRA’s goals. In <strong>1995, how-ever, the rules were tightened</strong>, so that banks had to show that theyhad actually made the required loans, not that they were simply try-ing to do so. The change had a profound effect. Under the initialrule, banks could turn down applicants who did not have the neces-sary credit resources—such as a significant downpayment or a job—but under the new regulations the onus was put on the banks to finda way to make the loan, even if it did not meet their lending stan-dards. The phrase in the CRA regulations was that banks had to be“flexible or innovative” in their underwriting. From the point of viewof the banks, their lending standards had to be loosened. They hadto show that the mortgages were being made." </span></p><p><span style="font-family: 'NewCaledonia'"></span></p><p><span style="font-family: 'NewCaledonia'"><span style="font-family: 'NewCaledonia'">"Accordingly, a strong argument can be made that the financial cri-sis was not caused by unregulated mortgage brokers, or by the ratingagencies, the Wall Street investment banks, or the commercial banksthat eventually had to be rescued with taxpayer funds. The responsi-ble parties were those who made and sustained government policiesthat distorted the housing finance market—resulting in the creationof an unprecedented number of high-risk mortgages. Fault also restswith the management of Fannie Mae and Freddie Mac, who failedto disclose that they were complying with government requirementsby acquiring and securitizing vast numbers of high-risk mortgages. "</span></span></p><p><span style="font-family: 'NewCaledonia'"></span></p></blockquote><p></p>
[QUOTE="av8torntn, post: 908798, member: 8259"] [URL]http://www.cato.org/pubs/journal/cj30n2/cj30n2-12.pdf[/URL] [FONT=NewCaledonia]"At around the same time in the early 1990s, the regulations underthe Community Reinvestment Act (CRA) were amended to increasetheir influence on bank mortgage lending. The CRA had beenadopted [B]in 1977,[/B] and initially required that banks make efforts toincrease mortgage lending in all the communities they serve, not justthe communities where middle income or well-to-do families lived.The enforcement mechanism was the withholding of regulatoryapproval for mergers, expansions, or other matters if a bank had notshown that it was working to achieve the CRA’s goals. In [B]1995, how-ever, the rules were tightened[/B], so that banks had to show that theyhad actually made the required loans, not that they were simply try-ing to do so. The change had a profound effect. Under the initialrule, banks could turn down applicants who did not have the neces-sary credit resources—such as a significant downpayment or a job—but under the new regulations the onus was put on the banks to finda way to make the loan, even if it did not meet their lending stan-dards. The phrase in the CRA regulations was that banks had to be“flexible or innovative” in their underwriting. From the point of viewof the banks, their lending standards had to be loosened. They hadto show that the mortgages were being made." [FONT=NewCaledonia]"Accordingly, a strong argument can be made that the financial cri-sis was not caused by unregulated mortgage brokers, or by the ratingagencies, the Wall Street investment banks, or the commercial banksthat eventually had to be rescued with taxpayer funds. The responsi-ble parties were those who made and sustained government policiesthat distorted the housing finance market—resulting in the creationof an unprecedented number of high-risk mortgages. Fault also restswith the management of Fannie Mae and Freddie Mac, who failedto disclose that they were complying with government requirementsby acquiring and securitizing vast numbers of high-risk mortgages. "[/FONT] [/FONT] [/QUOTE]
Insert quotes…
Verification
Post reply
Home
Forums
Brown Cafe Community Center
Current Events
Barney Frank
Top