Did the CRA really basis the mortgage meltdown?
Did the Community Reinvestment Act really cause the mortgage meltdown that also lead to the nonspecific economic downturn? Were banks punished or sued for not giving sub-prime loans to minorities? If not the CRA, what is this stroke all about? Has it be helpful in any instrument? Were banks punished for not lending to minorities? Thanks.
Answers:
It didn't comfort matters, but you won't hear Barney Frank or Christopher Dodd fess up to it.
If the answer is too simple, later it probably isn't true.
The problem was caused by big investment firms mixing sub prime next to the prime mortgages, and then selling them as securities. When some of the subprimes went impossible, it caused the entire security to get something done below expectations. No one knew what the securities were worth and so ancestors stopped buying them. It had nothing to do near the real value of the mortgage back securities. It was all nearly the perception of the mortgage backed securities.
If you want to blame someone, blame the big banks - nearby the ones that created the mortgage backed securities.
No, it be corrupt Clinton followers that took the CRA to a new low. Read the link below and look at the date.
http://en.wikipedia.org/wiki/Community_R…
Since only one wall took advantage of it, I would say that no, it be not a factor.
Reagan's deregulation of banks and mortgages was the gasoline, and the bank's bleak management was the clash.
Well, the CRA along with frequent other factors, including artifically low interest rates by the federal reserve, fannie and freddie and some other stuff.
I think minorties should hold housing, but it doesnt mean we should force banks to lend to them, because surrounded by the long run, they cant afford it. Socialism caused this crisis, not "Runaway Capitalism."
No. Of the top 25 subprime lenders, solely one was subject to the CRA. The CRA was not blanket policy; it with the sole purpose affected certain financial institutions. Source(s): http://www.mcclatchydc.com/251/story/538…
"...the notion that the Community Reinvestment Act is somehow responsible for poor lend decisions is absurd.
Here's why.
The Community Reinvestment Act applies to depository bank. But many of the institutions that spurred the massive growth of the subprime market weren't regulated bank. They were outfits such as Argent and American Home Mortgage, which were collectively not regulated by the Federal Reserve or other entities that monitored compliance with CRA. These institutions worked hand within glove with Bear Stearns and Lehman Brothers, entities to which the CRA likewise didn't apply. There's much more. As Barry Ritholtz action in his fine rant, the CRA didn't force mortgage companies to offer loans for no-money down, or to throw underwrite standards out the window, or to encourage mortgage brokers to aggressively hope out new markets. Nor did the CRA force the credit-rating agencies to slap high-grade ratings on subprime debt.
Second, abundant of the biggest flameouts in real estate hold had nothing to do next to subprime lending. WCI Communities, builder of highly amenitized condos within Florida (no subprime purchasers welcome there), filed for collapse in August. Very few of the tens of thousands of now-surplus condominiums in Miami be conceived to be marketed to subprime borrowers, or minorities—unless you count rich Venezuelans and Colombians as minorities. The multi-year plague that has be documented in brilliant detail at IrvineHousingBlog is playing out in one of the least possible subprime housing markets in the nation.
Third, lend money to poor people and minorities isn't inherently risky. There's plenty of evidence that in reality it's not that risky at all. That's what we've learned from several decades of microlending programs, at home and in a foreign country, with their very elevated repayment rates. And as The New York Times recently reported, Nehemiah Homes, a long-running initiative to build homes and sell them to the working poor within subprime areas of New York's outer boroughs, has a repayment rate that lenders in Greenwich, Conn., would envy. In 27 years, at hand have been not as much of than 10 defaults on the project's 3,900 homes. That's a rate of 0.25 percent... " Source(s): "Subprime Suspects: The right blames the credit crisis on poor minority homeowners. This is not merely offensive, but entirely wrong."
http://www.newsweek.com/id/162789
The democrats and ACORN forced banks to make loans to losers who could not repay. Some repugs be paid off not to interfere.
from what I understand, it's responsible for about 5 percent of the questionable mortgages...
so... it played a division... not a huge part... but a part... from what I construe...
I am not that familiar with the actual details...
You got it!
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Answers:
It didn't comfort matters, but you won't hear Barney Frank or Christopher Dodd fess up to it.
If the answer is too simple, later it probably isn't true.
The problem was caused by big investment firms mixing sub prime next to the prime mortgages, and then selling them as securities. When some of the subprimes went impossible, it caused the entire security to get something done below expectations. No one knew what the securities were worth and so ancestors stopped buying them. It had nothing to do near the real value of the mortgage back securities. It was all nearly the perception of the mortgage backed securities.
If you want to blame someone, blame the big banks - nearby the ones that created the mortgage backed securities.
No, it be corrupt Clinton followers that took the CRA to a new low. Read the link below and look at the date.
http://en.wikipedia.org/wiki/Community_R…
Since only one wall took advantage of it, I would say that no, it be not a factor.
Reagan's deregulation of banks and mortgages was the gasoline, and the bank's bleak management was the clash.
Well, the CRA along with frequent other factors, including artifically low interest rates by the federal reserve, fannie and freddie and some other stuff.
I think minorties should hold housing, but it doesnt mean we should force banks to lend to them, because surrounded by the long run, they cant afford it. Socialism caused this crisis, not "Runaway Capitalism."
No. Of the top 25 subprime lenders, solely one was subject to the CRA. The CRA was not blanket policy; it with the sole purpose affected certain financial institutions. Source(s): http://www.mcclatchydc.com/251/story/538…
"...the notion that the Community Reinvestment Act is somehow responsible for poor lend decisions is absurd.
Here's why.
The Community Reinvestment Act applies to depository bank. But many of the institutions that spurred the massive growth of the subprime market weren't regulated bank. They were outfits such as Argent and American Home Mortgage, which were collectively not regulated by the Federal Reserve or other entities that monitored compliance with CRA. These institutions worked hand within glove with Bear Stearns and Lehman Brothers, entities to which the CRA likewise didn't apply. There's much more. As Barry Ritholtz action in his fine rant, the CRA didn't force mortgage companies to offer loans for no-money down, or to throw underwrite standards out the window, or to encourage mortgage brokers to aggressively hope out new markets. Nor did the CRA force the credit-rating agencies to slap high-grade ratings on subprime debt.
Second, abundant of the biggest flameouts in real estate hold had nothing to do next to subprime lending. WCI Communities, builder of highly amenitized condos within Florida (no subprime purchasers welcome there), filed for collapse in August. Very few of the tens of thousands of now-surplus condominiums in Miami be conceived to be marketed to subprime borrowers, or minorities—unless you count rich Venezuelans and Colombians as minorities. The multi-year plague that has be documented in brilliant detail at IrvineHousingBlog is playing out in one of the least possible subprime housing markets in the nation.
Third, lend money to poor people and minorities isn't inherently risky. There's plenty of evidence that in reality it's not that risky at all. That's what we've learned from several decades of microlending programs, at home and in a foreign country, with their very elevated repayment rates. And as The New York Times recently reported, Nehemiah Homes, a long-running initiative to build homes and sell them to the working poor within subprime areas of New York's outer boroughs, has a repayment rate that lenders in Greenwich, Conn., would envy. In 27 years, at hand have been not as much of than 10 defaults on the project's 3,900 homes. That's a rate of 0.25 percent... " Source(s): "Subprime Suspects: The right blames the credit crisis on poor minority homeowners. This is not merely offensive, but entirely wrong."
http://www.newsweek.com/id/162789
The democrats and ACORN forced banks to make loans to losers who could not repay. Some repugs be paid off not to interfere.
from what I understand, it's responsible for about 5 percent of the questionable mortgages...
so... it played a division... not a huge part... but a part... from what I construe...
I am not that familiar with the actual details...
You got it!
Related Questions: