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Ignore Liberal Poverty Pimps: Community Reinvestment Act Helped Cause the Wall Street Crisis
Capital Research Center ^ | October 4, 2008 | Matthew Vadum

Posted on 10/04/2008 1:31:00 PM PDT by vadum

Getting class-warriors to admit they're wrong about anything is always a struggle.

Witness Bill O'Reilly's attempt to get House Financial Services Committee chairman Barney Frank (D-Massachusetts) to admit he was on the wrong side of housing policy for decades. Frank, a member of the kooky socialist Congressional Progressive Caucus, wouldn't give an inch in a recent interview even though his fingerprints (and those of some Republicans) are all over the current crisis on Wall Street. (See transcript from October 2 "The O'Reilly Factor" show here; video here)

But let's look at the facts.

Stanley Liebowitz, an economist at the University of Texas, wrote that the current mortgage market debacle is "a direct result of an intentional loosening of underwriting standards -- done in the name of ending discrimination, despite warnings that it could lead to wide-scale defaults."

Well, duh!

Enacted in 1977, the Community Reinvestment Act (CRA) catered to liberals' sick fascination with economic egalitarianism. CRA inspired the aforementioned intentional loosening of underwriting standards and helped to alter the culture of financial institutions in America. It encouraged lenders to rely less on usual lending criteria such as creditworthiness, i.e. whether the borrower can and will actually pay the money back.

CRA, a financial affirmative action scheme, played a large role in getting all U.S. lenders --regardless of the specific regulatory regimes they fell under-- to start playing fast and loose with loans. Lenders were terrified of being called racist by left-wing groups such as ACORN, the Greenlining Institute, the National Council of La Raza, the National Low Income Housing Coalition, and the National Community Reinvestment Coalition so they did what Corporate America often does: they tried to appease the left by buying it off.

Good luck with that, Rabobank.

The CRA isn't entirely to blame for the nation's economic turmoil, but it, and a number of economic factors including the Federal Reserve Board's decision to keep interest rates artificially low for far too long after the 9/11 terrorist attacks, created a perfect financial storm. Since money was ridiculously cheap, bankers took leave of their senses and went overboard with exotic mortgage products as investors kept inflating the housing bubble and sending home prices into orbit. The bubble popped, and now the whole country is suffering. Thanks, CRA.

But left-wingers refuse to accept that their beloved policy is largely responsible for the human suffering that the economic downturn is only just beginning to cause.

The race-baiting Cynthia Tucker of the Atlanta Journal-Constitution disingenously suggests that pointing out the flaws of the CRA constitutes "playing the race card." This is a cheap trick aimed at shutting down discussion of the CRA.

The liars at John Podesta's Center for American Progress are trying to confuse the issue by hiding the culpability of liberalism in a kind of word smog.

Take this lawyerly CAP item, "Idea of the Day: The Community Reinvestment Act Didn't Cause the Financial Crisis," which makes an attempt at misdirection. It argues that the CRA came into force "long before subprime mortgages at the heart of the current crisis were ever made." But that's not the point. The CRA mandated a loosening of underwriting standards, and this loosening of underwriting standards eventually permeated the entire lending industry. (CAP's argument here seems similar, if not identical, to the argument made here by the National Community Reinvestment Coalition.)

Two other CAP liars argue here and here that conservatives complaining about the CRA are merely blame-shifting.

Even as write this blog entry, mere hours after the president signed the spectacularly awful $700-billion Wall Street bailout package into law, the irresponsible activists of the National Community Reinvestment Coalition are determined to destroy even more of America's wealth. The NCRC's convention planned for March 11-14, 2009, is called "Achieving the Financially Inclusive Society."

These economic equality-obsessed people never learn and if economists' worst fears come true, we're all going to be a lot more financially equally soon.

To quote Treasury Secretary Henry Paulson out of context, heaven help us!

(Note: For more information on how community organizers used the CRA to shake down lenders and wreck the economy, see my article, "Financial Affirmative Action," in the American Spectator, September 29, 2008. Here is a link to it. Another good source of information on the CRA is the paper titled "The Community Reinvestment Act's Harmful Legacy," by the Competitive Enterprise Institute's Michelle Minton.)


TOPICS: Business/Economy; Front Page News; Politics/Elections
KEYWORDS: 110th; 2008; acorn; bailout; cra; democrats; economy; elections; financialcrisis; frank; hosuingbubble; nobama08; socialengineering; votefraud; voterfraud

1 posted on 10/04/2008 1:31:01 PM PDT by vadum
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To: vadum
The linkage between the housing agencies and ACORN is both incestuous and smelly. The housing agencies (under the CRA)are, by all measures, a well choreographed RICO organization in bed with ACORN and the Democrat party.

Investigative interrogatories with Raines, Johnson, Dodd, Obama, Gorelick, Clinton, Frank, and others would produce many "process crimes" that would make Scooter Libby's crimes look like a jaywalking infraction.

The DC Federal holding pen would not be able to contain all the bureaucrats and elected officials that SHOULD be there.

2 posted on 10/04/2008 1:33:25 PM PDT by SERKIT ("Blazing Saddles" explains it all.....)
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To: vadum
Marxists know no other way. They're perfectly happy with CRA as it's one of the greatest accomplishments of wealth redistributionism in all time. And the resulting plunge into full blown socialism has them absolutely orgasmic:


3 posted on 10/04/2008 1:40:00 PM PDT by Jim Robinson
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To: Jim Robinson

Is Barney about to spit or swallow?


4 posted on 10/04/2008 1:42:25 PM PDT by WellyP
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To: Jim Robinson

The American Socialist Revolution of 2008 - and not a shot was fired.


5 posted on 10/04/2008 1:44:35 PM PDT by austingirl
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To: WellyP
Since Barney broke up with Herb Moses (the former Fannie Mae Executive) it looks like his best friend is “Rose Palm”.
6 posted on 10/04/2008 1:45:28 PM PDT by WellyP
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To: vadum

Excellent ad from NRCC:

“What Just Happened?”

http://www.youtube.com/watch?v=exxVZTKq1vA


7 posted on 10/04/2008 1:51:10 PM PDT by Portrait of a Lady
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To: vadum

BUMP


8 posted on 10/04/2008 1:51:27 PM PDT by Pontiac (Your message here.)
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To: vadum

I have not seen the dollar amount percentage of the CRA loans that went bad. If we had this number it would then be possible to determine how much of this damned mess is the fault of CRA and the Demonic-rats. Since I have not seen this percentage in the liberal press I assume it is huge.

Does anyone on this forum know the numbers. It would be interesting.

Relative to the bailout I can see a justification for bailing out the bad loans that the government forced them to make. I can not approve one damn cent for the other loans that went bad.

What are the numbers??


9 posted on 10/04/2008 1:53:11 PM PDT by cpdiii (roughneck, oilfield trash and proud of it, geologist, pilot, pharmacist, iconoclast.)
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To: WellyP

I don’t know. Looks like Dodd is preparing for a Frank sandwich.


10 posted on 10/04/2008 1:53:37 PM PDT by Jim Robinson
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To: SERKIT

The DC Federal holding pen would not be able to contain all the bureaucrats and elected officials that SHOULD be there.

That blustering Baboon Barney Frank would, I’m quite sure, arrogantly disagree. Not I.


11 posted on 10/04/2008 1:57:00 PM PDT by wita
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To: vadum

Q: What do you have when you have a group of people in a society who crave Power and who NEVER admit when they are wrong?

A: A crack-up.


12 posted on 10/04/2008 1:57:51 PM PDT by TalBlack
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To: vadum

bump for later read


13 posted on 10/04/2008 2:02:42 PM PDT by proudmilitarymrs
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To: vadum
Ignore Liberal Poverty Pimps: Community Reinvestment Act Helped Cause the Wall Street Crisis

Nice try skippy.

Without the Community Reinvestment Act, the Liberal Poverty Pimps would still be having bake sales to finance their cruise into Socialism...

14 posted on 10/04/2008 2:27:06 PM PDT by Publius6961 (Change is not a plan; Hope is not a strategy.)
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To: cpdiii

I have not seen the dollar amount percentage of the CRA loans that went bad. If we had this number it would then be possible to determine how much of this damned mess is the fault of CRA and the Demonic-rats.

Just insert ‘subprime’ whenever you see CRA and you have your answer. By definition they don’t/didn’t qualify for regular loans.


15 posted on 10/04/2008 2:29:10 PM PDT by sheana
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To: austingirl
The American Socialist Revolution of 2008 - and not a shot was fired....

....yet!

16 posted on 10/04/2008 2:41:46 PM PDT by meyer (Go, Sarah, Go!!)
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To: vadum
Check out pages 38-39 of the October 13, 2008 issue of Time and be prepared for elevated blood pressure.
17 posted on 10/04/2008 2:44:02 PM PDT by Notasoccermom (.)
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To: sheana
I have not seen the dollar amount percentage of the CRA loans that went bad. If we had this number it would then be possible to determine how much of this damned mess is the fault of CRA and the Demonic-rats.

It's not just loans that were made under the guise of the CRA's mission - it's the fact that the CRA forced banks to lower credit standards significantly. What was done to help those that had poor credit ratings was also done to help a new breed of house flippers as well. If they're going to give an unemployed or underemployed welfare recipient a loan, they really can't justify not giving an employed guy with 4 houses a similar offer.

18 posted on 10/04/2008 2:47:40 PM PDT by meyer (Go, Sarah, Go!!)
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To: vadum
So, left wing ideas (CRA, ACORN) were the seeds and a huge left wing idea (bail out the financial system and take it over) is the cure.

I think Marx would be proud of us.

19 posted on 10/04/2008 3:28:02 PM PDT by groanup (Does all of Wall Street get on the gov't pension plan now?)
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To: vadum

See http://www.youtube.com/watch?v=exxVZTKq1vA

See also http://www.youtube.com/watch?v=1RZVw3no2A4 for a really good 10 minute video about the problem.

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


20 posted on 10/04/2008 3:30:54 PM PDT by narses (...the spirit of Trent is abroad once more.)
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To: vadum; informavoracious; larose; RJR_fan; Prospero; Conservative Vermont Vet; ...
+

Freep-mail me to get on or off my pro-life and Catholic List:

Add me / Remove me

Please ping me to note-worthy Pro-Life or Catholic threads, or other threads of interest.

Obama Says A Baby Is A Punishment

Obama: “If they make a mistake, I don’t want them punished with a baby.”

21 posted on 10/04/2008 3:31:21 PM PDT by narses (...the spirit of Trent is abroad once more.)
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To: Jim Robinson

Frank: “No, no, don’t thank me, thank all of us for trashing the economy. Hold your applause, hold your applause, I’m too humble for that.”


22 posted on 10/04/2008 3:33:19 PM PDT by FlyVet
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To: SERKIT
Can anyone quote the dollar volume (annual or otherwise) of loans CRA and Acorn had a hand in?
23 posted on 10/04/2008 3:47:50 PM PDT by Blacksheep (Why don't we use the S word? Obama is a socialist)
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To: vadum
Since money was ridiculously cheap, bankers took leave of their senses and went overboard with exotic mortgage products as investors kept inflating the housing bubble and sending home prices into orbit.

The easy money should have also caused a bubble in the stock market however a reform from the 1929 stock market crash requires that investors put 50% down to buy a stock on credit. Had there been a similar law for housing, say 20%, the bubble wouldn't have gotten out of hand. However this law would have "hit women and minorities hardest" hence it just isn't going to happen.

24 posted on 10/04/2008 4:10:32 PM PDT by Reeses (Leftism is powered by the evil force of envy.)
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To: vadum

Is this what happens when the lunatics run the asylum?

JoMa


25 posted on 10/04/2008 10:19:59 PM PDT by joma89
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