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Of all the factors behind the collapse of America's financial institutions during the second half of 2008, few have been as trumpeted - or misunderstood - as the Community Reinvestment Act (CRA). This Carter-era legislation, intended to boost residential mortgage lending in lower-income urban neighborhoods, increasingly has served as a blank check for community groups to shake down depository institutions into lowering their credit standards to reach marginally qualified borrowers. In extracting such concessions, these groups have contributed to the ongoing explosion in loan defaults and foreclosures. Undaunted, House Democrats, led by Rep. Eddie Bernice Johnson, D-Tex., are proposing to...

This is the second installment of a Monday series excerpting the chapter on political implications from Thomas Sowell's latest book, "The Housing Boom and Bust."IBD Exclusive Series: Thomas Sowell on The Politics of the Housing BoomIn recent times, government officials have increasingly pressured banks and other lenders to lend to people whom they would not lend to otherwise. One of the first federal government efforts to change the process of mortgage lending by private financial institutions was the Community Reinvestment Act of 1977. Like many government policies or programs, it began small and grew in scope and severity over the...

Urge a reexamination of Community Reinvestment Act compliance U.S. Representative Michele Bachmann (MN-06), a member of the House Financial Services Committee, wrote Sheila Bair, Chairman of the FDIC and Chairman of the Federal Financial Institutions Examination Council (FFIEC), earlier this week to urge a thorough reexamination of the rules governing compliance with the Community Reinvestment Act (CRA). “Under current rules, many banks make donations to and enter into partnership with ACORN and its affiliates to meet their obligations under the CRA. Millions of dollars flows from these banks into ACORN in what amounts to borderline extortion,� said Bachmann. “There’s more...

Recent disclosures about certain questionable practices at ACORN, the left-leaning nationwide community advocacy organization, have raised questions about the organization's very legitimacy. But as ACORN rightly moves to get its house in order and restore its credibility, it might be worth taking a few moments to ask some other questions, not about ACORN but about ourselves, and our commitment to lifting up the millions of our fellow Americans who live in a netherworld of poverty, hopelessness and victimization. You cannot understand the ACORN videos (understand, not condone), without making some honest effort to understand this netherworld in which ACORN and...

Did the Community Reinvestment Act—the 1977 federal law pressing banks to lend to low- and moderate-income borrowers—fuel toxic lending and thus play a significant role in causing the financial meltdown? “CRA was not the cause of the crisis,” Comptroller of the Currency John Dugan maintained this past August. Though he had little quantitative detail about the performance of CRA-related loans, Dugan claimed that they had performed better than loans made by lenders not subject to the CRA. Further, he contended, borrowers of CRA loans had defaulted at much lower rates than borrowers of subprime mortgages. Other defenders of the act...

GLENN: From high above Times Square in Midtown Manhattan, this is the third most listened to show in all of America. Hello, you sick twisted freak. Welcome to the program. Is Michele Bachmann on the phone? Congresswoman Bachmann, welcome to the program. How are you? CONGRESSWOMAN BACHMANN: Good morning, Glenn Beck. I'm doing great. Great to talk to you. GLENN: May I say I believe you are one of a handful. Give me a number. I'm thinking five, a handful of people, maybe three, that actually are in there doing the right thing, and you'll fall on your sword if...

Conservative Republicans are capitalizing on the troubles of community activist group ACORN—ranging from charges of voter registration fraud to embarrassing videos of its employees—to revive their long-standing fight against a federal law that grades banks on their investments in poor and minority neighborhoods. The 1977 Community Reinvestment Act was intended to end redlining, a practice in which banks in effect walled off many inner-city neighborhoods from mortgage loans. But some GOP lawmakers say it has outlived its purpose and is being used inappropriately by ACORN to shake down banks for money. They want to repeal the law, scale it back...

Expanding the Community Reinvestment Act As we try to shake off the financial crisis, here's a bright idea. Take a law that has led to the writing of an enormous amount of bad mortgages and expand it. Then take enforcement away from bank examiners and give it to housing activists. Sound like a poisonous cocktail? Well, it is what the Obama administration and Democrats are currently stirring up on Capitol Hill. The White House and Congress want to expand a 30-year-old law--the Community Reinvestment Act--that helped to fuel the mortgage meltdown. What the CRA does, in effect, is compel banks...

As we try to shake off the financial crisis, here's a bright idea. Take a law that has led to the writing of an enormous amount of bad mortgages and expand it. Then take enforcement away from bank examiners and give it to housing activists. Sound like a poisonous cocktail? Well, it is what the Obama administration and Democrats are currently stirring up on Capitol Hill.

With all the attention paid to the health care battle, Association of Community Organizations for Reform Now, and the president's "Full Ginsburg" appearances on five Sunday talk shows, few people noticed a hearing with an exceedingly boring title -- "Proposals to Enhance the Community Reinvestment Act" -- held last week in the House Financial Services Committee. But the session marked a key moment in the ongoing battle between Republicans and Democrats over what caused our current financial woes -- and how we might best avoid getting into the same trouble again. At the hearing, and in others across Capitol Hill,...

The Acorn scandal, in which amateur journalists posing as a prostitute and a pimp went seeking a mortgage for a house of prostitution and received advice on how to evade the law, is a fitting new chapter in the controversial history of the advocacy group. Acorn found its way into the mortgage business through the Community Reinvestment Act, the 1977 legislation that community groups have used as a cudgel to force lenders to lower their mortgage underwriting standards in order to make more loans in low-income communities. Often the groups, after making protests under CRA, were then rewarded by banks...

Nothing succeeds like failure. Here's a press release from the National Community Reinvestment Coalition: Expansion of Community Reinvestment Act Would Promote Economic Security and Financial Inclusion for For ... whom? Can't you guys at least finish your titles? I'm imagine in your "Who? Whom?" equation, I'll end up a Whom, but I don't think the end of your sentence was going to be "for Steve Sailer's Family." So, what's in Barney's Bill, H.R. 1479, the "Community Reinvestment Modernization Act of 2009"? - Extension of the CRA from mortgages to small business loans. - Inclusion of credit unions (my vague impression...

A number of experts believe that aggressive enforcement of the 1970s-era Community Reinvestment Act contributed to the mortgage meltdown, and thus to the greater financial crisis, by requiring financial institutions to lend to unqualified borrowers. Now, the Democratic majority in the House of Representatives is responding to that situation by proposing to expand the scope and power of the Community Reinvestment Act. This morning House Financial Services Committee chairman Rep. Barney Frank held a hearing on H.R. 1479, the "Community Reinvestment Modernization Act of 2009." The bill's purpose is "to close the wealth gap in the United States" by increasing...

The Community Reinvestment Act, first passed in 1977 under Jimmy Carter, was intended to increase minority homeownership. It grew out of charges that banks were "redlining" entire inner-city neighborhoods as bad credit risks. Banks now were forced to perform outreach to these areas. In the '70s and '80s, banks could show that they were trying to do that by advertising in minority newspapers and having representatives sit on the boards of local groups. In other words, they were rated on the effort made and not on the results achieved. Creditworthiness still mattered. In 1995, as Howard Husock pointed out eight...

The Acorn scandal, in which amateur journalists posing as a prostitute and a pimp went seeking a mortgage for a house of prostitution and received advice on how to evade the law, is a fitting new chapter in the controversial history of the advocacy group.Acorn found its way into the mortgage business through the Community Reinvestment Act, the 1977 legislation that community groups have used as a cudgel to force lenders to lower their mortgage underwriting standards in order to make more loans in low-income communities. Often the groups, after making protests under CRA, were then rewarded by banks with...

Oversight: As the Senate votes to de-fund Acorn, add pimping, tax evasion and human trafficking to voter fraud paid for with taxpayer dollars and you have an organized criminal enterprise. It's time to investigate.After Acorn workers were caught on tape in three cities allegedly abetting what they believed was a fraudulent-mortgage and sex-trafficking scheme, the Senate has voted overwhelmingly to strip the group of funding in the Transportation/Housing and Urban Development appropriations bill. The amendment, offered by Nebraska Republican Sen. Mike Johanns, passed by an 83-to-7 margin and marked the third time this year that Republicans have tried to block...

There is one overwhelming fact about the world economy that cannot be wished away. Excess capacity in industry is hovering at levels not seen since the Great Depression. Too many steel mills have been built, too many plants making cars, computer chips or solar panels, too many ships, too many houses. They have outstripped the spending power of those supposed to buy the products. This is more or less what happened in the 1920s when electrification and Ford’s assembly line methods lifted output faster than wages. It is a key reason why the Slump proved so intractable, though debt then...

Dauphine Island The Community Reinvestment Act (CRA) passed in 1977 occupies a lot of space in my book, Citizen Wealth, because it is both arguably the single largest legislative victory achieved by community organizations over the last generation and because it has helped millions purchase homes, one of the most dramatic creators of citizen wealth for lower income and working families, especially in minority communities. The Obama Administration has proposed a super-cop, the Consumer Financial Protection Agency (CFPA), to ensure that CRA and other consumer protections are fully followed and enforced across the gamut of financial institutions. Yippee, yi-ky-yay! Thank...

Stimulus: The group that pushed banks into the risky loans that brought the economy down is now eligible for a huge chunk of stimulus cash. The stimulus plan does create jobs — for community activists.As in any agreement, contract or piece of legislation, the devil is in the details. So it is with the stimulus package percolating in Congress. Analysts are beginning to figure out that only a small percentage of the money will actually trickle down into the economy in the first two years, not enough to do much stimulating. Yet in this package is a $4 billion pot...

In order that Freepers have direct access to it, I am re-posting this link to yesterday's report "The Role of Government Affordable Housing Policy in Creating the Global Financial Crisis of 2008" from the U.S. House of Representatives Committee on Oversight and Government Reform. The link has been noted in at least two other threads today, however I believe that because it's (a) timely, (b) important, and (c) comprehensive, that it warrants its own thread. And this version will get you straight to the report without having to wade through the snark of those other threads. By the way, this...

I first heard about the Community Reinvestment Act sometime in late 2008. When I first heard commentators come on major networks like Fox News and assign it as the most significant blame for the mortgage crisis I was stunned. I have spent the last nearly seven years in the mortgage business. If the CRA was such a factor, why hadn't I heard of it before? As I learned more about it, I started to understand why it became such a popular cause celebre.

In a stunning report (pdf) released yesterday by the House Committee on Oversight and Government Reform, the current financial crisis was traced back to government intervention in the U.S. housing market.  Yes, you read that right.   The report issued by the Republican minority didn’t disclose the names of the culprit individuals, but it sure pointed a lot of fingers at organizations, politicians, lobbyists and Fannie Mae/Freddie Mac. According to the report, government intervention “created ‘affordable’ but dangerous lending policies which encouraged lower down payments, looser underwriting standards and higher leverage.  Finally, government intervention created a nexus of vested interests...

Fannie Mae and Freddie Mac were the chief culprits in the housing crisis because they encouraged people who could not afford payments to borrow money, according to a congressional report released Tuesday. The claims in the report have long been advanced by conservatives, who argue that the Community Reinvestment Act and other federal programs fed the housing bubble that burst in 2007 and led to the economic downfall in 2008. But the report explains in detail how Fannie and Freddie -- government sponsored enterprises (GSE) that were not subject to the same oversight as other publicly traded firms -- “privatized...

The Republicans have again chosen their favorite boogey men for blame in the mortgage crisis, Fannie Mae, Freddie Mac and the Community Reinvestment Act. The Republicans House Committee on Oversight and Government Reform lead by Congressman Darrell Issa has released this white paper today on all three entity's roles in the mortgage crisis. In my opinion, the Republicans have once again inflated the role of all three in the crisis.

ACORN, which played a starring role in creating the subprime mortgage crisis, plans to add insult to injury by harassing lenders across the nation with protests tomorrow in an effort to coerce them into supporting President Obama's Making Home Affordable foreclosure-avoidance program. Austin King, director of ACORN Financial Justice, sent out a press release today advising of the demonstrations that are planned as part of its "Homewrecker 4" campaign. The four financial companies targeted are Goldman Sachs, HomEq Servicing, American Home Mortgage, and OneWest. Read the whole document here. ACORN plans to hit Dallas, Pittsburgh, Philadelphia, St. Louis, New York...

Earlier this week I noted that I had changed my mind on the Community Reinvestment Act. Contrary to my initial conclusion, the evidence is overwhelming that the CRA played a significant role in creating lax lending standards that fueled the housing bubble. Once I realized this, I had to abandon my suspicion that the anti-CRA case was a figment of the rhetoric of Republicans attempting to distract attention from their own role in the mortgage mess. So I laid out the facts and arguments that had convinced me to switch sides in the CRA debate. It was a long series...

A mortal blow to the time-gap argument Earlier this afternoon, I explained at length why the long delay between the 1977 passage of the CRA and the mortgage boom didn't absolve the law from playing a role in loosening mortgage standards. After that post, I came across a 2004 newsletter from the San Francisco Federal Reserve that explains why the CRA became much more dangerous "effective" in the 1990s. From the newsletter: While the results in these studies are consistent in some respects with a role for the CRA in narrowing any gap between LMI and other home purchase lending,...

If you still doubt the role of the Community Reinvestment Act in encouraging lax lending practices, you should check out this 1996 pamphlet published by the Comptroller of the Currency. It discusses "some activities undertaken by small national banks that demonstrate exemplary performance under the Community Reinvestment Act." Those activities now look a lot like the creation of toxic loans. And what are those activities? Hawley National Bank is praised for offering residential loans with flexible terms, including three-year and five-year balloons and adjustable-rate mortgages. It also offers down-payment assistance. First National Bank of the Berkshires' loan portfolio, which consisted...

How many uninsured Americans are there really? It’s a number that the mainstream media have repeatedly misrepresented to make the health care “crisis” seem worse than it is.

The Obama administration’s latest financial regulatory reform proposal contains a stunning surprise hidden on page 67: “Rigorous application of the Community Reinvestment Act should be a core function of the CFPA.” The Community Reinvestment Act, or CRA, should be a core function of the CFPA or the Consumer Financial Protection Agency. Along with Fannie Mae and Freddie Mac at the very epicenter of the financial meltdown last year, the CRA is one of the vehicles used to inveigle, incent or threaten banks into lowering their lending standards to provide home loans to those who simply cannot afford them. According to...

From page 70 (PDF page)...4. Access. The Agency should enforce fair lending laws and the Community Reinvestment Act and otherwise seek to ensure that underserved consumers and communities have access to prudent financial services, lending, and investment. A critical part of the CFPA’s mission should be to promote access to financial services, especially for households and communities that traditionally have had limited access. This focus will also help ensure that the CFPA fully internalizes the value of preserving access to financial services and weighs that value against other values when it considers new consumer protection regulations. Rigorous application of the...

A high-profile Chicago-based advocate for low-income communities has agreed to pay the federal government $550,000 to settle claims that it misused federal grant money. The National Training and Information Center was accused by the U.S. attorney’s office in a 2006 federal lawsuit of violating the federal False Claims Act when it used some of the millions it received from a division of the U.S. Department of Justice to lobby members of Congress with hopes of securing more grants. Federal law prohibits the use of federal funds to curry favor with congressmen or congressional employees in connection with a grant. NTIC,...

When real life creeped in on the liberal land of unicorns and the folks that couldn't afford the subprime loans proved to be unable the afford the subprime loans, the government, as promised, went on the hook, and the economy tanked. And here we sit. The New York Times woke up this morning, reached up for the curb, and, in a drunken, slurring, liberal fit, decried the horror of minority neighborhoods facing the lion's share of foreclosures.

The effect that the Community Reinvestment Act (CRA) on the housing is one of the touchier questions in the financial crisis debate. The act was designed to encourage more minority lending, and though it doesn't require banks to lend out to shaky borrowers, banks make certain CRA commitments in order to get regulatory approval for acquisitions. A possible effect of this is that banks wishing to grow via acquisition end up with an outsize volume of these commitments. So what's the effect at national banking giant Bank of America (BAC). On the company's conference call, CFO Joe Price said the...

After writing several articles about this country’s mortgage meltdown and the little-talked about role which illegal aliens have played in this crisis, a woman who I will call “Mary” contacted me with inside information on the crisis. What follows is a brief interview I conducted with Mary. (I am protecting her identity because she still works in the mortgage business.) Q) What is your background and who have you worked for? A) I am in the Mortgage Industry and personally audited thousands of sub prime loans while working as a contractor. The last company I worked for was EMC, previously...

Some government officials never learn from their mistakes. Case in point, the Federal Deposit Insurance Corporation (FDIC) is chastising a New England financial institution for not making enough risky loans: A Massachusetts bank that has defied the odds and remained free of bad loans amid the economic crisis is now being criticized by the Federal Deposit Insurance Corp. for the cautious business practices that caused its rare success. The secret behind East Bridgewater Savings Bank's accomplishments is the careful approach of 62-year-old chief executive Joseph Petrucelli. "We’re paranoid about credit quality," he told the Boston Business Journal. That paranoia has...

EVIDENCE FOUND!!! Clinton administration's "BANK AFFIRMATIVE ACTION" They forced banks to make BAD LOANS and ACORN and Obama's tie to all of it!!! ASTONISHING VIDEO EVIDENCE FOUND!!! the Clinton administration admitting their policy of "BANK AFFIRMATIVE ACTION". Secretary Cuomo admits they forced banks to make BAD LOANS. Video also shows Obama's tie to all this. Obama is seen discussing his legal and community organizing career. See how it ties in to ACORN and the Clinton administration enforcement of the Community Reinvestment Act. http://www.youtube.com/watch?v=ivmL-lXNy64&feature=channel

Abstract This paper discusses the difficulties of applying the Community Reinvestment Act to banks. It finds that the complications of community investment needs and the opacity of compliance formulas make any banking act too small a commitment to have real effects. Introduction The objective of this paper is to suggest some of the complexities of economic investment with respect to the Community Reinvestment Act (CRA) that make the algebraic formulas of compliance far out of range of true measurement. I will discuss some of the ways that the government has attempted to implement CRA compliance, what this reveals about the...

The FDIC has given a negative review to a Massachusetts community bank with no delinquent loans or foreclosures on its books and no anticipated losses. The "needs to improve" rating is a result of the bank being picky about lending, according to the FDIC's interest in the Community Reivestment Act. Joseph Petrucelli, chief executive of East Bridgewater Savings since 1992, told the Boston Business Journal that his bank is "paranoid about credit quality." Apparently that will get you a poor rating in the eyes of the FDIC. The agency also faulted Petrucelli for not promoting the bank's loan products enough....

A Massachusetts bank that has defied the odds and remained free of bad loans amid the economic crisis is now being criticized by the Federal Deposit Insurance Corp. for the cautious business practices that caused its rare success.

Congressional Democrats Bankrupted the Nation *snip* The End In April 2001, before the events of 9/11 and just after entering the White House, President Bush began signaling warnings to members of congress that both Fannie and Freddie were headed into deep treacherous waters which could cause “strong repercussions in financial markets.” In early 2003, the Bush White House upgraded its warnings to “a systemic risk that could extend well beyond just the housing markets.” On September 10, 2003, Bush Treasury Secretary John Snow testified in congress that something had to be done to confront the growing storm at Fannie and...

Hello, I am a long time reader and very rare poster, I apologize if I'm putting this in the wrong area. I don't think I've ever created a thread here before... Anyways, I am a college student and have been asked by student.com to become a "News & Politics" blog writer. I've been around that site since I was 15 or so(22 now) and accepted, and I was wondering if free republic would be willing to look over my articles before I post them? I'd appreciate your criticism much more than the criticism of high school students. I know you...

How many references to the Community Re-investment Act have you seen on the news recently? Check WorldNetDaily Henry Lamb wrote a good piece on that Act and published it there, on WND. It is at the core of the bank failure. bottom line it is government meddling that caused the bank failure and the meddling known as trade agreements has helped foreign countries to control our markets so that today just about everything is made overseas and sold here our credit card is maxed out we are broke and it is due to government meddling Remember the most important date...

We have all been had. It seems that so many people I have talked to don't understand the enormity of what has been done, and what congress is trying to do to us now, that I decided to sit down and write it all out. How did we get here? 1) in 1977 the Community Reinvestment bill passes a democrat Congress and is signed by Jimmah Caaaaartar. This opened federal dollars to organizations like ACORN. 2) ACORN is the brainchild of a couple of very evil people named Cloward and his wife Piven. They stated that the best way to...

Don't miss this video!!!

Two narratives seem to be forming to describe the underlying causes of the financial crisis. One, as outlined in a New York Times front-page story on Sunday, December 21, is that President Bush excessively promoted growth in home ownership without sufficiently regulating the banks and other mortgage lenders that made the bad loans. The result was a banking system suffused with junk mortgages, the continuing losses on which are dragging down the banks and the economy. The other narrative is that government policy over many years--particularly the use of the Community Reinvestment Act and Fannie Mae and Freddie Mac to...

It is all very well for President Obama to vent his anger on all those US bankers who continued to claim billions of dollars in bonuses while expecting Washington to bail them out after the sub-prime mortgage scandal brought the banks to their knees. But conveniently overlooked has been the curious part Mr Obama himself played in the sub-prime debacle. At the heart of it was a 1995 amendment to the Community Reinvestment Act which legally required banks to lend money to buy homes to millions of poor, mainly black Americans, guaranteed by the two biggest mortgage associations, Fannie Mae...

Subprime Crisis: The media have pounded President Bush for a wave of Hispanic home foreclosures. But it was Democrats who launched a drive to loosen credit for Hispanics — many of them illegals.Democrats and their advocacy groups also prodded Fannie Mae and Freddie Mac to buy the high-risk NINJA (no income, no job, no assets) loans they'd pressured banks to make to Hispanic immigrants. Now immigrants are defaulting on subprime mortgages in droves, adding to the toxic debt that is poisoning the financial industry. Yes, Bush was "eager," as the Washington Post described it, to put more Hispanic families into...

Blaming CRA makes little sense, but gets finance industry off the hook ___It seems, on the face of it, a theory too absurd to even be taken seriously: A ragtag band of anti-poverty activists pushes the White House into forcing lenders to make bad loans to poor and minority borrowers, setting off a subprime loan crisis that puts the entire global economy at risk. Yet in the frenzy of coverage as a financial markets collapse loomed in mid-September, the idea that the Community Reinvestment Act (CRA) was somehow responsible took off in the media—in the mainstream press as well as...