Decent history of the housing crisis and the impact of CRA

Re: Community Reinvestment Act from Wikipedia.

Scary words if you are bank president…

The CRA mandates that each banking institution be evaluated to determine if it has met the credit needs of its entire community.

…regulations for the CRA were strengthened by focusing the financial regulators’ attention on institutions’ performance in helping to meet community credit needs.

Almost comical now, if it was not so scary.

Representative Barney Frank (D-MA) claimed of the thrifts “These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

So the basics are thus… The government decided we need more home ownership in the poorer communities. They focused their attention on those banks. To avoid detection banks gave loans they knew had a likely high default rate. Then they were let off the hook by selling those loans to Fannie and Freddie which were protected from default as GSE’s by the tax-payers.

And here we are with a Socialized Mortgage market. Now think about this history and these arguments when you hear about the right to Healthcare for the poorer communities.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: