Thursday, October 9, 2008

Do You Really Want To Know What Happened To Our Economy? Banks Were Blackmailed!

You can read the article below in it's entirety, but basically to summarize:
-Groups, including ACORN have blackmailed $9.5 Billion in pools of bank capital.
-ACORN housing has taken $760 million from one bank alone.

(H/T...Pittsburgh Tribune Review)

Roots of rotten mortgages
By
Ralph R. ReilandMonday, September 29, 2008

The roots of today's mortgage-based financial crisis can be traced back to the Community Reinvestment Act (CRA), which Jimmy Carter signed in 1977. Seeking to address complaints from anti-poverty activists and housing advocates about banks allegedly discriminating against minority borrowers and "redlining" inner-city neighborhoods, the CRA decreed that banks had "an affirmative obligation" to meet the credit needs of victims of discrimination in borrowing.

To add a government stick to the process, the CRA decreed that federal banking regulators would consider how well banks were doing in meeting the goal of more multiculturalism in loaning when considering requests by banks to open new branches or to merge.

A good "CRA rating" was earned by way of increasing loans in poor neighborhoods. Conversely, lenders with low ratings could be fined.

The Fed, for instance, warned banks that failure to comply with government guidelines regarding the delivery of "equal credit" could subject them to "civil liability for actual or punitive damages in individual or class actions, with liability for punitive damages being as much as $10,000 in individual actions and the lesser of $500,000 or 1 percent of the creditor's net worth in class actions."

However well-intentioned in terms of delivering "economic justice," this push for more government-directed social engineering produced a widespread weakening of long-established industry standards for credit worthiness.

Led by Congressional Democrats, this policy of replacing private and decentralized decision-making with a system of centrally-delivered rewards and punishments was basically a one-party effort. Republicans, it seems, were more aware of the unintended consequences that flow from government interference in the market.

As Investor's Business Daily recently put it, succinctly and correctly: "Over the past 30 years, Democrats, along with a handful of Republicans, have demonized lenders as racist and passed regulation after regulation pressuring them to make more loans to unqualified borrowers in the name of diversity."

The march toward the eventual financial meltdown picked up speed during the Clinton administration via an increased lowering of loan standards in order to expand minority borrowing.

The result was widely praised. "It's one of the hidden success stories of the Clinton era," wrote Ronald Brownstein in May 1999 in the Los Angeles Times. "In the great housing boom of the 1990s, black and Latino homeownership has surged to the highest level ever recorded. The number of African-Americans owning their own homes is now increasing nearly three times as fast as the number of whites; the number of Latino homeowners is growing nearly five times as fast as that of whites."

In 2000, Howard Husock reported in City Journal that the "Clinton Treasury Department's 1995 regulations made getting a satisfactory CRA rating much harder. There would be no more A's for effort. Only results -- specific loans, specific levels of service -- would count."
The "specific levels of service" referred to how well banks were responding to complaints, including complaints from advocacy groups that were in the business of complaining.

"By intervening -- even just threatening to intervene -- in the CRA review process, left-wing nonprofit groups have been able to gain control over eye-popping pools of bank capital, which they in turn parcel out to individual low-income mortgage seekers," reported Husock. "A radical group called ACORN Housing has a $760 million commitment from The Bank of New York."

In addition to setting the stage for giving money for mortgage payouts to ACORN and other lending amateurs, CRA authorized those organizations to collect fees from the banks for their "marketing" of loans.

"The Senate Banking Committee has estimated that, as a result of CRA, $9.5 billion so far has gone to pay for services and salaries of the nonprofit groups involved," reported Husock.

There's big money, in short, in "nonprofit" activism -- and upward mobility. A guy carries a sign advocating "Change" in front of a bank and the government turns him into a salaried protester, credit analyst and dispenser of mortgage money.

"The changes came as radical 'housing rights' groups led by ACORN lobbied for such loans," reports Investor's Business Daily, regarding the Clinton era. "ACORN at the time was represented by a young public-interest lawyer in Chicago by the name of Barack Obama."

30 comments:

Andrew said...
This comment has been removed by a blog administrator.
Mike said...

And the worst part is, it won't stop. No matter who wins the election, the same complainers are going to yell 'racism', and the bankers aren't going to want to deal with that and they'll just hand out the money and hope it explodes again on someone else's watch, after they got their bonuses.

We have lost our willingness to tell certain people 'no'. I'm an employed and successful white male, and if every borrower had to go through what I had to go through to get my first mortgage the banks would be just fine.

the political pyrate said...

Oh, I see. In your universe the banking system was brought down by an orginization that helps people keep their homes and not by the greedy bankers who were willing to leand to anyone with a pulse.

How did ACORN bring down the banks in Iceland? Did ACORN have an office in London too?

You people need to face the facts here. This crisis was caused by the greed of those who thought they could get away with wnything.

I hope that some day you will be able to see reality and not simply blame a Democrat. If the Republicans knew this was a problem for "years" why didn't THEY do something about it. You seem to forget that the GOP had a solid lock on our Goverment for 6 out of the last eight years and when this crisis broke over a year ago the Dems had thin majorities on both houses for about a year.

The GOP had every opportunity to fix this problem you say they saw coming.

Grow up.

Stacy said...

Political pyrate-Go back and take a look at votes. The republicans only controlled both houses for 2 years, not six. They didn't win the House until 2004 and it was taken back in 2006. Neither house was fillibuster proof which means that they did not have enough votes to get out of either house which is what the Dems face today. Twice they did try to do something, in 2003 & 2006, but Dems blocked them. Banks who kept their tighter restrictions were fined, picketed, and threatened with boycotts. Were some banks greedy..yes, but look at what role our government played. Yes, it was the Dems...even Bill Clinton said he tried to bring it under control and they fought him. Do a little more research, look at actual votes, not just blogs.

Anonymous said...

in your summary ... you said 9.5 million ... you meant billion! according to the article!

Donna said...

The earth is flat and Democrats are for poor people ... 2 popular myths.

Youtube and Warner Music censor political speech by pulling a video viewed over 1,200,000 times in 6 days on Mon, 9/29; "Burning down the house: what caused our economic crisis?" On Tues, 9/30, youtube pulled several repostings. By Wed, 10/1, youtube let it be reposted multiple times, some in its original form, and some with classical music, but all without the orig 1,200,000 views counted. Right now the new version is at http://www.youtube.com/watch?v=1RZVw3no2A4 and a copy of the original is at http://www.youtube.com/watch?v=JqbgcejIT_k.

The "affordable" housing that Democrats pushed onto poor people included interest only and variable rate loans that are easier to default on and wreck your credit; when the advice given to middle class homeowners, even some with college degrees, is "do not take out an interest only or variable rate mortgage".

The schools that Democrats push onto poor people graduate only half of the kids in Chicago and in Baltimore only 33% of the kids who want to graduate can pass 8th grade level tests. I've heard that 75% of African American males drop out of school in Baltimore City. They compete with illegal immigrants for jobs in 1 of the 4 states that allow illegal immigrants to obtain drivers licenses.

No, Democrats don't like poor people. They use poor people like a commodity to enrich their unions, enrich their buddies who bring "development" to the city, enrich their organizations who provide "services" to the poor, and enrich the businesses that save money and get around the Democrat's excessive regulation of the work place by hiring illegal immigrants.

If poor people had any idea how much money is supposedly spent on their behalf and NEVER reaches them, I believe they wouldn't vote for Democrats for a generation.

Stacy said...

Thank you Anonymous. It has been corrected. Apparently, I needed more sleep.

Anonymous said...

Hey Stacy, If the GOP didn't control the House of Reps until 2004 how did they manage to have The Speaker of the House from 1995 - 2007?

Newt Gingrich 1995 - 1999

Dennis Hastert 1999 - 2007

Look, I know I'm in partison territory here and should probably just show myself out but think for a minute. The ACORN home page says they have 400,000 member families. Now if we say an average of 4 per family are of voting age that constitutes 1,600,000 people. Heck, lets double it to 3,200,000 voters.
So part of your claim is that in a nation of over 300 million, with 105 million that voted in Bush v Gore 2000,the policies of an organization like ACORN have controlled U.S. banking policy for 31 years?(CRA passed in Carter Admin. 1977)
Does that sound reasonable to you? Is the U.S. Government that impotent?
In the same time period under GOP and DEM administrations we intervened in Bosnia, Kuwait, Iraq, Afganistan but we have no control over home loans. Wall Street fat cats are just innocent bystanders?

Sorry, but I beg to differ.

Good Luck.

Randy

Stacy said...

Randy-I was correct that the Republicans only had both the House and senate for 2 years, my error was which. Dems had the Senate under Daschle until 2004. The Republicans had both houses 2004-2006 until the Dems took both houses in 2007. As for the babble about the ACORN voters, voters don't make law. Is the government that impotent...apparently. I don't just blame the Dems...there were a handful of Republicans that were in with them. As soon as I have the list I will name them as well.

Anonymous said...

Stacy,

"Voters don't make law."

Fundamental lack of understanding of the American political process.

See ya down the road.

Randy

Stacy said...

And you wonder why there is no respect between the parties. I do have an understanding of the process. I was speaking in simple terms. Voters did not write THIS law. It started in 1977, but as Bill Clinton himself has admitted, things became more lenient under him in 1995. Once he saw the unintended affect he tried to pull back, but it was too late. The Dems fought him on it. This also led to the 5 million fraudulent mortgages held by illegals in the US according to HUD statistics.

I have been extremely respectful to you and even invited your opinions. in return, I get a superiority complex from you. unlike you I have put blame on Bush and republicans, but this specific issue was not their doing. So much for that coming together theory.

Anonymous said...

Stacy:

Can't blame this financial mess on the Republicans:

http://www.youtube.com/watch?v=_MGT_cSi7Rs

Anonymous said...

http://alaskansfortruth.blogspot.com/

For the readers who enjoy transparency.

Sorry if I came across as condescending Stacy, seemed like a rather naive statement. Wasn't coming back but found the above link and given your passion for the truth thought I'd share.

I know the way to the door.

Good Luck

Randy

DaveF said...

All of Congress is responsible for this crisis, as are Banks and Wall Street. Two Republicans; Ron paul in 2003 and John McCain in 2006 tried to warn Congress, and nobody listened. But the Democrats do carry the brunt of the responsibility for several reasons. They pushed to strengthen provisions of the Community Reinvestment Act when Republicans introduced the Gramm-Leach-Bliley Act. Was it smart to repeal the Glass-Steagall Act, I don't think so, but it was even dumber to increase the abuses allowed in the Community Reinvestment Act. But, here is the Democratic Blackmail...the Clinton Administration stressed that it "would veto any legislation that would scale back minority-lending requirements." Why do the Democrats give assistance to low income and minority's with one hand, and then put them in a worse position with the other? Is it fair to put them in a financial situation that will further ruin their lives? No, but it is done to keep them down, so they have a base to feed off of. Just look at inner cities, they haven't been eliminated. There has been some improvements, but not enough to justify saying we have a grip on it. For those who think Banks cannot be pressured by organization with agenda's think about this. What do you think is the percentage of whites who feel guilty about slavery? I do not know the exact percentage, but I bet it is pretty high. And this even includes citizens whose family settled here well after it was abolished. Why? Because we are constantly told white Americans are bad because of past events in history. This causes more harm then good. It prevents people from coming together by keeping tension between all the races. Everyone, with a conscience, judges every word, look or act to self censor themselves. That produces very little mutual cooperation. Getting back on point, if a group doesn't get the cooperation from a bank, they can picket outside, and, unfortunately, use the race card. What is the likely result? Whites feeling that guilt may be swayed to stop using the bank...no money. Blacks will not use the bank...more no money. See where this is going. But how can this be possible? Simple. There are laws about racism. Further on this issue...The Community Reinvestment Act, because it is designed to force banks to loan money to minorities requires a monitoring system. Shouldn't a loan be given based on your credit rating and ability to repay the loan? So as not to cause a banking and mortage failure we have to fund. Does you credit rating care about your race or your history of paying back debt? Then why do "ALL" credit and loan applications ask for your "Ethnic Background"? It's a monitoring system. The bank can prove how many loans were given to minorities.

This is what pisses me off. WE are paying double here. First by this crappy bailout package, and if a bank crashes or losses money; Whose money do you think the bank is loaning out? "OURS"! And think about this too...Your money in savings earns maybe 2% interest, but a bank loan with even 8% means...you get 2% and the bank gets 6%. I know they have to make money, but really, when you pay all the other fees, I bet we're lucky if we get 1%.

I do not profess to be an economic expert, so I try to use common sense and what I find from research and life experience.

Anonymous said...

Randy

Your blog reference, Alaskans for truth, is an opinion blog, not the actual truth. At least Stacy deals in fact. Most of her references are from actual newspapers not opinion blogs.

She tries to be fair and the fact that she wants to listen to you should tell you something. It would be one thing if you came her to debate or find information outside of your norm, but it appears that you come just to push liberalism. You didn't even notice that it was not her article. She referenced it.

Undecided Voter said...

I am still an undecided voter. I have read this blog for a few weeks to get the Republican point of view. I am an independent voter. I do not like what Bush has done over the last eight years, but I do not agree with Obama's positions either.

I have been trying to find somewhere that uses some type of fact to place blame on Republicans on the housing issue, but even in what I consider left leaning newspapers, there are none. SNL this weekend even went after Democrats for the issue. No, they are not my source of news, but it does beg the question.

Can some of the liberal posters point me in a direction of FACT as to the Republicans blame in the Housing market?

At this point, I may go in the booth, close my eyes, and wing it.

LeBeau0605 said...

Stacy,

Have you seen the report of Obama's connection to the elections in Kenya.

http://womenforsarahpalin.net/forums/f3/breaking-news-obama-campaigned-for-church-burning-odinga-t308.html

First, he tries to go behind president bushs back on Iraq, and now this.
Oddly enough, the Kenya incident doesn't sound too Christian. 800 churches burned...some with people inside them.

Check out the report.

LeBeau

Anonymous said...

Ok. Let’s make sure that we understand what happen. There was a program that wanted to help the less fortunate buy homes. The decision to offer the loans by banks still should have fallen under the capitalist market driven decision of supply and demand. The “monkey” that through in the wrench to this process was the greed mongering bank executive and Wall Street peddlers of those industry stocks. NOT the program. The program did not specify that a potential home buyer not be asked what they made or whether they would be able to pay back the 200K loan, instead they were offered these schemes of ARMs and Principal Only Loans that would entice home buyers to over buy. Why you ask? The $$$$$. Mortgage lenders 1% loan processing fee is much higher at 200K than 75K. Everyone was buying so the home prices were inflated creating this bubble that just exploded. Banks wanted a better bottom line so they pushed risky loans. Wall Street kept buying the only real investment (housing) in the US since the DotCom era. The war was the other. High risk means as we all know a Rescue Bailout by our taxes for the wealthy. Great call GW. None of these risky business practices had anything to do with the conception of providing more people the opportunity to buy a house. Simple idea that was raped by capitalism filled with the Republican’s version of “crack cocaine” GREED!

Stacy said...

Anonymous,

That is not completely true. Was there greed...yes. However, if you actually read the CRA and the amendments to it gave banks a quota system of who they had to offer homes to. It is not capitalism when the government interferes with the process.

If you actually read the article, some banks under CRA were fined or sued if they did not offer homes to certain portions of the population. In fact, Citibank was sued BY none other than Barack Obama for not giving out enough loans to low income families.....and he WON.

If you don't believe me, feel free to check the actual law and look into some of the old Chicago newspapers for the law suit.

Anonymous said...

Stacy

The CRA does not say banks have to sell ONLY to low income families. The pressure was to sell to low income homes but there is little money to be made there. I found this little diddy below.
The program/poor did NOT create this problem.

Mortgage Foreclosure Fun Fact
Republicans are blaming poor people and Democrats for the foreclosure crisis. The basic contention is that the use of Fannie and Freddie to facilitate home mortgages for people who would otherwise not be able to afford home ownership ("minorities and risky people," as Fox news' Neil Cavuto put it) is at the heart of the sub-prime collapse.

I've spent a few days looking for statistics relating to this. Specifically, I've been looking for average price of foreclosed properties to see whether mortages on low-end housing -- the kind of homes "minoritiees and risky people" would buy -- are really the problem. My suspicion, given that high-rent places like Orange County, California, lead the league in foreclosures, is that it's not Fannie and Freddie's lending to the lower middle class that is driving this crisis.

Tonight I found this, which is, admittedly, a year old. Still:

Nationwide, in the three months June through August, some 68,426 foreclosed homes sold in 2007 vs. 54,886 in 2006. The average sales price dropped from $271,000 to just over $239,000. The discount-to-market ratio increased slightly from 76.42% to 77.68%.

This means, doing a little math, that the value of the average foreclosed home is just over $300,000. The average home sale price, according to this, is $212,000, which means the average foreclosure value is more than 140% of the average home price.

This would seem, on the surface, to indicate that government-induced lending to poor people isn't really the heart of the problem.

Anonymous said...
This comment has been removed by a blog administrator.
Stacy said...

Yes...your post was deleted. I have been overly respectful of your opinions on my site. I will NOT accept being called racist on my own site. Especially when I have been the one criticizing Republicans for not going after the black vote. Find another site to pin that crap on...it will no longer be tolerated on mine.

Anonymous said...
This comment has been removed by a blog administrator.
Stacy said...

I find it funny that they same people who were attacking Sarah Palin and her family and have been calling Bush and the Republicans names for years are now asking for restraint.

For anyone new to my site, please look at the site in it's whole. I am a mom of three. I have asked all of my posters to be respectful.
I have repeatedly asksed for people to have open, honest, debate. Unfortunately, my invitation has come with racial accusations that I will not stand for.

I will have a new post tonight and I continue to welcome respectful debate. If you want a hate site, go find another one...both sides.

Anonymous said...

I have read this blog before, but never posted. Like you, I am a mom too and enjoyed getting your perspective on the issues. After reading some of the post lately, I felt that I needed to comment. The last thing that I would think about this blog or it's write is that she is a radical of any sort. She has given her point of view and it has been respectful to all involved. Stacy-I am sorry that you are being personally attacked. You have done nothing to warrant it.

Eva said...

Stacy:

I discovered your site many months ago by accident but have felt a real connection to you based on your geographical location and your political opinions. I was raised in Pittsburgh during the era when Democrats stood for the middle-class and I was proud to be a Democrat. Since the Primary, I have changed my opinion and my voter registration. I came to the realization that I was a moderate; therefore my defection to Independent. I hope that some day the Democrats can redeem themselves from this corrupt and self-serving Party they have become. But I doubt that will be achieved until every one of the inept and greedy politicians currently in office are replaced.

I have mostly agreed with your posts but found your site just recently being overrun by Obama supporters’ intent on disrupting your site. It was bringing out the worst in me and making me want to lash back, revealing a side of me that I didn’t very much like. I am appreciative that you have decided to eliminate that element of bloggers so we can respectfully get back to debating the issues and not throwing barbs.

You are my lifeline to Pittsburgh and the conservative newspaper as I am currently in Florida for the election and the only news I have available are from the extreme left. Last year I would have scoffed at the idea that I would not be voting for a Democrat this year; what a difference a year makes.

I think everyone should try to be objective and respectful of others’ points of view and I think you have achieved that - - - keep up the good work.

Stacy said...

Eva & Anonymous-Thank you for your support. It is greatly appreciated. Please continue to follow the blog. I will do my best to ensure that neither side spews hate. Thanks again.

Anonymous said...
This comment has been removed by a blog administrator.
Stacy said...

Read my latest blog. If you do not agree, you do not have to visit again. Continue to challenge my posts with racial inuendos and you will no longer be welcome here.

Anonymous said...

I thanked you with a comment to today's post, but given the activity here, thought I would respond here as well.

How can I not agree Stacy? You took the responsible course, stood up and drew a line in the sand for decency.

Thank you.

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