tag:blogger.com,1999:blog-6329595.post2208268528508351226..comments2024-03-28T11:36:34.873-05:00Comments on Althouse: "Obama coopts the old McCain by severing him from the wack-job from Wasilla. More shrewd moves."Ann Althousehttp://www.blogger.com/profile/01630636239933008807noreply@blogger.comBlogger97125tag:blogger.com,1999:blog-6329595.post-22270218301403683112009-01-17T22:48:00.000-06:002009-01-17T22:48:00.000-06:00Obama wants McCain? Take him, please.It will beat...Obama wants McCain? Take him, please.<BR/><BR/>It will beat the hell out of the tired old faux suspense of wondering which particular votes McCain will decide to screw his voters and party on.richard mcenroehttps://www.blogger.com/profile/10659450906647134430noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-53257372513850537022009-01-17T02:21:00.000-06:002009-01-17T02:21:00.000-06:00But, I'm ignorant. And, my comments are quotes fro...<I>But, I'm ignorant. And, my comments are quotes from articles.</I><BR/><BR/>Exactly. Regurgitating articles isn't an illustration of intelligence. More specifically, simply repeating the same thing over and over again as you have done all these months WITHOUT offering up anything else is unconvincing and, yes, ignorant.Joehttps://www.blogger.com/profile/04450897654318345683noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-10163517692573831782009-01-16T21:57:00.000-06:002009-01-16T21:57:00.000-06:00garage mahal has one of the best online monikers e...garage mahal has one of the best online monikers ever.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6329595.post-36727740336952979352009-01-16T21:42:00.000-06:002009-01-16T21:42:00.000-06:00attend a tribute dinner for John McCain?Hm. As a b...attend a tribute dinner for John McCain?<BR/><BR/>Hm. As a bona fide, unrepentant Conservative who voted for Sarah Palin (i.e. not John McCain), I would not p*ss in McCain's m**th if his t**th were on fire.paul a'bargehttps://www.blogger.com/profile/08854004347728185047noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-6778258627543537532009-01-16T21:25:00.000-06:002009-01-16T21:25:00.000-06:00AJ,at your re-licensing meetingFunny. So, you don...AJ,<BR/><BR/><I>at your re-licensing meeting</I><BR/><BR/>Funny. So, you don't know much about this stuff do you?<BR/><BR/>Joe,<BR/><BR/>Er, who monitors whom? Nice way to demonstrate no understanding of the most basic regulatory structures. <BR/><BR/>But, I'm ignorant. And, my comments are quotes from articles.<BR/><BR/>That's rich.Sprezzaturahttps://www.blogger.com/profile/14859397164637821056noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-65949939013610932262009-01-16T21:18:00.000-06:002009-01-16T21:18:00.000-06:001jpb, you may be right about CRA, but rather than ...1jpb, you may be right about CRA, but rather than quote biased articles, present an cogent alternate explanation of the current financial state. Until then, you just come across as a rather ignorant apologist.Joehttps://www.blogger.com/profile/04450897654318345683noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-79848452764628301142009-01-16T21:16:00.000-06:002009-01-16T21:16:00.000-06:001jpb, your ignorance is astounding. The FDIC will ...1jpb, your ignorance is astounding. The FDIC will take you over so fast your head will spin? Have you even paid attention to what Countrywide was doing? How about Washington Mutual? The FDIC was awfully late to both those parties.Joehttps://www.blogger.com/profile/04450897654318345683noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-83935314231639394842009-01-16T21:07:00.000-06:002009-01-16T21:07:00.000-06:00The CRA got banks to issue subprime by using a for...The CRA got banks to issue subprime by using a form of pressure that bordered on blackmail....i.e make more loans or we will show up en masse at your re-licensing meeting and make your life hell.<BR/><BR/>I think the CRA learned these tactics from Jesse Jackson or vice versa.I'm Full of Souphttps://www.blogger.com/profile/00241724007440718575noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-21164167705426499352009-01-16T20:32:00.000-06:002009-01-16T20:32:00.000-06:00You said in bold that banks were paying stiff fine...You said in bold that banks were paying stiff fines from the CRA. I asked for proof of one bank being fined. <BR/><BR/>Of the top 25 issuers of sub-prime loans, only one was subject to the CRA. This would seem to put a enormous hole in your argument.garage mahalhttps://www.blogger.com/profile/06485491995866513686noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-47438069548032673972009-01-16T19:57:00.000-06:002009-01-16T19:57:00.000-06:00DBQ, Has it occurred to you that you worked for a ...DBQ, <BR/><BR/>Has it occurred to you that you worked for a piss poor bank? If you are claiming that fifteen years ago your management was citing CRA as a motivation for bad loans, something is wrong. Either your memory is off or your management was nuts (or maybe you were at a lender that was in trouble for blatant red lining.)<BR/><BR/>First, I do appreciate that you are walking away from your fine claim. Good for you.<BR/><BR/>But, CRA was so toothless fifteen years ago it doesn't make any sense for you to have felt that this was a gun to your head. Back then it was a bit of a joke the way you could fudge quasi-CRA actions rather than actual actions.<BR/><BR/>Seerak,<BR/><BR/>I don't have a problem admitting that CRA was a factor. I absolutely remember that it was on the mind. And, it is true that 1995 did make it more important to actually care about CRA. But, CRA never lead to terrible loans. And, the data (as I linked to way up thread) supports my anecdotal experience, as a former bank executive. <BR/><BR/>The really bad stuff came from the non-CRA companies that spread like wild fire in recent years, so it's insane to blame that on CRA. That's a fact (as the data in my link show.)<BR/><BR/>P.S.<BR/>I think all these private sector products sprang up because too much many dollars (yes, I'll attack Greenspan too) in the world were chasing too few investment opportunities and "smart" people thought they could use financial engineering (the implications of which were not understood or effectively regulated) to eliminate risk. Add some greed, unbounded optimism, and a belief that the other players in the financial chain must be the break on risky behavior so each isolated link ran as far and as fast as they could. Oh and, importantly, don't forget to add fraud.<BR/><BR/>These were the sources of the problem, imho. It's not CRA. If it was CRA, the non-CRA companies wouldn't have been the big players. And, CRA loans would have been the really bad performers, but they weren't, in fact they developed a positive repayment track record over time, as my previous link demonstrates.<BR/><BR/>Data is your friend.<BR/><BR/>P.P.S.<BR/><BR/>You think a bank is cowering out of fear of limited growth and expansion because of CRA? You think this would cause them to give out a bunch of bad loans, that can't be justified to the FDIC. <BR/><BR/>Hahaha.<BR/><BR/>The regulators will shut you down so fast your head will spin. I mean shut down, out-o-biz, take over. Bad loans are a lot scarier than CRA to a banker, they mean death. This is likely why the CRA products had good repayment records (as my link shows), but the non-CRA subprime folks sucked. The FDIC, who loves regular audits, over your shoulder means something.Sprezzaturahttps://www.blogger.com/profile/14859397164637821056noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-53210725018477635762009-01-16T19:30:00.000-06:002009-01-16T19:30:00.000-06:00FLS:How can I say this politely? In your scenario,...FLS:<BR/><BR/>How can I say this politely? <BR/><BR/>In your scenario,the bank might now own a house with a mortgage in excess of its fair market value and then have to lay out money for repairs to make it sellable or rentable.<BR/><BR/>You think that is a windfall for banks? Yoy think that is their subtle strategy? If you do, you need to take a remedial course in basic arithmetic.I'm Full of Souphttps://www.blogger.com/profile/00241724007440718575noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-16647433437264842562009-01-16T19:07:00.000-06:002009-01-16T19:07:00.000-06:001% interest shows that the subprime debacle was ca...<I>1% interest shows that the subprime debacle was caused by Alan Greenspan. Bankers, searching for some investment that could yield a return, forgot that risk goes along with reward</I><BR/><BR/>This I will agree with. Greenspan's easy money policy has a great deal to do with the current sorry state of affairs.<BR/><BR/>As to Garage and JPwhatever. I suggest you re read my posts,this time without your agenda glasses on.<BR/><BR/>I never said we "were" fined, just that we were under threat of fines and restrictions on the bank's ability to merge or grow with new branches. Because, oh I don't know... gee whiz ....the bank wanted to grow and possibly acquire/merge with other banks, we lenders were encouraged and sometimes threatened to make bad loans. <BR/><BR/>You guys really need to learn how to read.<BR/><BR/>As a lender, part of my compensation, future raises and advancement was based on the quality of my loan portfolio. Meaning that if I made loans that went bad, my chances of the above were less than likely. Forcing me to make loans that I KNEW were sour went against the grain. That's why I quit lending and went 100% into the financial advisory business.Dust Bunny Queenhttps://www.blogger.com/profile/13341429444562280127noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-37980557068462261652009-01-16T18:46:00.001-06:002009-01-16T18:46:00.001-06:00When interest rates are low, as they were in 2001-...<I>When interest rates are low, as they were in 2001-2002, investors will borrow that cheap money at 1% to invest in anything that has a higher rate of return, if it exists. What was hot in 2001? Not stocks, that bubble had already popped with the dotcoms. Bonds? Not at 1% interest.</I><BR/><BR/>1% interest shows that the subprime debacle was caused by Alan Greenspan. Bankers, searching for some investment that could yield a return, forgot that risk goes along with reward.former law studenthttps://www.blogger.com/profile/15196697206046544350noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-22049249834762763722009-01-16T18:46:00.000-06:002009-01-16T18:46:00.000-06:00If you were being honest you would admit that the ...<I>If you were being honest you would admit that the IBD editorial is wrong. CRA doesn't fine, the enforcement mechanism is expansion/merger/growth limitations. That's a fact.</I><BR/><BR/>If you wre being honest, you'd admit to how powerful a lever that was -- even more so than mere fines.<BR/><BR/>http://www.city-journal.org/html/10_1_the_trillion_dollar.html<BR/><BR/>From this eight-year old article:<BR/><BR/><I>"The Clinton administration's get-tough regulatory regime mattered so crucially because bank deregulation had set off a wave of mega-mergers, including the acquisition of the Bank of America by NationsBank, BankBoston by Fleet Financial, and Bankers Trust by Deutsche Bank. <B>Regulatory approval of such mergers depended, in part, on positive CRA ratings.</B> "To avoid the possibility of a denied or delayed application," advises the NCRC in its deadpan tone, "lending institutions have an incentive to make formal agreements with community organizations." <B>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</B>, which they in turn parcel out to individual low-income mortgage seekers. A radical group called ACORN Housing has a $760 million commitment from the Bank of New York; the Boston-based Neighborhood Assistance Corporation of America has a $3-billion agreement with the Bank of America; a coalition of groups headed by New Jersey Citizen Action has a five-year, $13-billion agreement with First Union Corporation. Similar deals operate in almost every major U.S. city. Observes Tom Callahan, executive director of the Massachusetts Affordable Housing Alliance, which has $220 million in bank mortgage money to parcel out, "CRA is the backbone of everything we do.""</I>Seerakhttps://www.blogger.com/profile/04126614695040517202noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-62735050929806573472009-01-16T18:41:00.000-06:002009-01-16T18:41:00.000-06:00That McClatchy article 1qpb linked represents the ...That McClatchy article 1qpb linked represents the usual selective-statistical-reporting-that-fits-a-given-agenda that characterizes much MSM reporting.<BR/><BR/>It seeks to show that the bulk of the bubble consisted of private capital, driven through private financing channels. This is true. But the devil is in the details they carefully left out.<BR/><BR/>When interest rates are low, as they were in 2001-2002, investors will borrow that cheap money at 1% to invest in anything that has a higher rate of return, <I>if it exists</I>. What was hot in 2001? Not stocks, that bubble had already popped with the dotcoms. Bonds? Not at 1% interest.<BR/><BR/>Nope, what was cooking at that time was real estate -- in addition to Fannie and Freddie, there was the sub-prime segment, goosed by the Clintonized 1995 version of the CRA. (That's the most damning omission in the McClatchy article; the number "1995" appears *nowhere* on that web page, even though they discuss the CRA. That's plenty of evidence in itself for considering the article as politically motivated. Errors or omissions of that size are not made innocently.)<BR/><BR/>In effect, the Bomb of 2008 was <I>fueled</I> by the Fed's easy credit, and <I>fused</I> by the CRA and sundry other government actions... that is, it was built *and* set off by government.<BR/><BR/>What the article sought to do was to supply people like 1jpb with the statistics needed to lend an air of seriousness to the argument that since the actual effects of the CRA were swamped by the flood of private capital, the CRA is therefore not to blame for the crash.<BR/><BR/>This is tantamount to arguing that a fuse does not contain nearly enough energy to blow up a building, therefore it cannot possibly cause any explosions.Seerakhttps://www.blogger.com/profile/04126614695040517202noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-62340451407890062462009-01-16T18:28:00.000-06:002009-01-16T18:28:00.000-06:00I'd like to see proof of one bank being fined. It ...I'd like to see proof of one bank being fined. It didn't happen.garage mahalhttps://www.blogger.com/profile/06485491995866513686noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-85713888086986205962009-01-16T18:27:00.000-06:002009-01-16T18:27:00.000-06:00DBQ,If you were being honest you would admit that ...DBQ,<BR/><BR/>If you were being honest you would admit that the IBD editorial is wrong. CRA doesn't fine, the enforcement mechanism is expansion/merger/growth limitations. That's a fact.<BR/><BR/>The same IBD editorial, in the first paragraph, says that CRA and Clinton in 1995 "triggered" the subprime crisis. Reality check: the really nasty sub-prime loans that ended up blowing up were 2 or 3 year fixed period ARMS and they were pushed by un/less regulated non-CRA companies (as my link way up demonstrates.) So, it's a quite silly to say that 2 or 3 year ARMS (from non-CRA companies) all of a sudden took off in the middle of the Bush administration because of Clinton changing CRA in 1995.<BR/><BR/>Shocking that an editorial would be more opinion (with serious logic flaws) than fact. [not really.]Sprezzaturahttps://www.blogger.com/profile/14859397164637821056noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-76637825762055867422009-01-16T17:58:00.000-06:002009-01-16T17:58:00.000-06:00Would it kill you to admit that you lied when you ...<I>Would it kill you to admit that you lied when you said you were under the gun of CRA "fines?"</I><BR/><BR/>Can't you read?<BR/><BR/><B>Banks with poor CRA ratings were hit with stiff fines and blocked from expanding their operations</B>Dust Bunny Queenhttps://www.blogger.com/profile/13341429444562280127noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-80941905554029119822009-01-16T17:53:00.000-06:002009-01-16T17:53:00.000-06:00DBQ,Would it kill you to admit that you lied when ...DBQ,<BR/><BR/>Would it kill you to admit that you lied when you said you were under the gun of CRA "fines?"<BR/><BR/>Or, is the fact that your comment does NOT support the idea of CRA fines happen to be as close as you can bring yourself to admitting the obvious--that CRA doesn't use fines for enforcement? <BR/><BR/>It was fifteen years ago, you could seek cover under the excuse of memory failure, rather than purposeful deception.<BR/><BR/>P.S.<BR/>Unrelated to your implicitly acknowledging that you lied about CRA fines:<BR/><BR/>Thanks for the links to IBD editorials and someone who uses profanity to rail against CRA. I already knew that some bankers and their supporters do complain about CRA. <BR/><BR/>Isn't it ironic for the anti-CRA folks to see what the un/less regulated non-CRA companies did. The un/less regulated private sector was falling all over itself to give out terrible loans. You can look at the data in my earlier comment (much further up-thread) to see what the non-CRA companies were doing.<BR/><BR/>Could it be that greed and loose regulations were the real motivators for the rise in destined-to-fail sub-prime loans? How else do you explain it--CRA doesn't work because there were lots of non-CRA loan providers (see my link above), and they provided the dirtiest and riskiest products? We've seen that the CRA lenders had good repayment rates w/ their loans (see my link) so by definition they weren't doing terrible destine-to-fail loans.Sprezzaturahttps://www.blogger.com/profile/14859397164637821056noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-86786360049798221972009-01-16T17:26:00.000-06:002009-01-16T17:26:00.000-06:00More from IBD"In a more aggressive pursuit of "so...More from IBD<BR/><BR/><I>"In a more aggressive pursuit of "social justice," the Clinton administration revised the CRA in April 1995 to mandate that banks pass lending tests in "underserved" communities and suffer tough new sanctions for failing to make enough loans there.<BR/><BR/>According to the language of the new Clinton regs, banks that used "innovative or flexible lending practices" to address the credit needs of low-income borrowers passed the test. Banks with poor CRA ratings were hit with stiff fines and blocked from expanding their operations. Soon, "flexible" lending became the norm, and banks used subprime loans, which charge higher interest rates, to cover the added risk.<BR/><BR/>But it wasn't enough. So Clinton ordered HUD to pressure Fannie Mae and Freddie Mac to buy the higher-risk loans from private banks and lenders, while adopting the same "flexible" credit standards. By 2000, HUD had mandated that low-income mortgages — including CRA-related loans — make up half of their portfolios.<BR/><BR/>To further spread the risk, Clinton legalized the securitization of such mortgages. In 1997, Bear Sterns securitized the first CRA loans — $385 million worth, all guaranteed by Freddie Mac. Thus began the massive bundling of subprime mortgages that wound up poisoning the entire industry.<BR/><BR/>The cause and effect is clear. As ex-Fed chief Alan Greenspan recently testified: "It's instructive to go back to the early stages of the subprime market, which has essentially emerged out of the CRA."</I>Dust Bunny Queenhttps://www.blogger.com/profile/13341429444562280127noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-545539188675345242009-01-16T17:24:00.000-06:002009-01-16T17:24:00.000-06:00Do you honestly believe car dealers [when you were...<I>Do you honestly believe car dealers [when you were a kid] could repossess a car and then re-sell it for the same price? </I><BR/><BR/>The "hard lot" dealers did. Their antics were covered by the local paper. And, I worked with a guy one summer who proudly bought a five year old Mercury Monarch, only to see it go back to the dealer three months later. The amount of depreciation in that time was negligible, especially if you turn the odometer back.<BR/><BR/>Regarding houses: Not that the lenders wanted the buyers to default, but the the downside of default seemed small. If you suddenly own an $800 K house, having to spend $8K on drywall, etc. seems negligible.former law studenthttps://www.blogger.com/profile/15196697206046544350noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-54971892060371325152009-01-16T17:19:00.000-06:002009-01-16T17:19:00.000-06:00The Community Reinvestment Act was passed in 1977 ...<I>The Community Reinvestment Act was passed in 1977 when bank competition was sharply limited by law and lenders had little incentive to seek out business in lower-income neighborhoods. But in 1995 the Clinton administration added tough new regulations. The federal government required banks that wanted “outstanding” ratings under the act to demonstrate, numerically, that they were lending both in poor neighborhoods and to lower-income households.<BR/><BR/>Banks were now being judged not on how their loans performed but on how many such loans they made. This undermined the regulatory emphasis on safety and soundness.</I><BR/><BR/><A HREF="http://www.ibdeditorials.com/IBDArticles.aspx?id=313718923222067" REL="nofollow">IBD Editorial</A><BR/><BR/><I>According to the language of the new Clinton regs, banks that used "innovative or flexible lending practices" to address the credit needs of low-income borrowers passed the test. <B><I>Banks with poor CRA ratings were hit with stiff fines and blocked from expanding their operations.</I></B> Soon, "flexible" lending became the norm, and banks used subprime loans, which charge higher interest rates, to cover the added risk.</I><BR/><BR/>If banks didn't make enough CRA loans they got a bad rating. Bad ratings limited the ability to expand, merge or purchase other banks, <BR/><BR/><I>The few cases in which the Board has denied an application on CRA grounds have sent an unmistakable message that it is crucial to have a satisfactory record of CRA performance before applying to expand. Institutions likely understand that the Board will not allow promises of future corrective action to substitute for inadequate current performance. </I><BR/><BR/><A HREF="http://www.federalreserve.gov/newsevents/Testimony/Braunstein20070521a.htm" REL="nofollow">Link</A><BR/><BR/>"As directed by the Bank Merger Act and the Bank Holding Company Act, the Federal Reserve takes into account a number of factors when it reviews applications for expansion" which include the Bank's CRA score.<BR/><BR/>The lesson is that if you want your institution to be able to expand you have to make a certain percentage of shit loans. We were told that if we didn't make these loans in a certain percentage we would be relieved of our jobs. Quota....maybe not directly by the CRA but coerced by the negative results of a bad CRA <BR/><BR/><I>The crickets are the result of egg on the face, not fifteen years.</I><BR/><BR/>The crickets are the fact that I'm actually at work and dealing with my investment clients at the moment.Dust Bunny Queenhttps://www.blogger.com/profile/13341429444562280127noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-84910719802964394412009-01-16T17:12:00.000-06:002009-01-16T17:12:00.000-06:00I'm frankly sick of the cheap vitriol directed at ...<I>I'm frankly sick of the cheap vitriol directed at this president at this time. God knows the pressure he must be under. To see the shallow and self-interested jockeying in Paris and Berlin at a moment of grave international crisis is to observe politics at its worst.</I><BR/><BR/><I>The coarseness of some of it is truly awful. In some conversations I've had with people who strongly oppose war, I keep hearing this personal demonization of Bush as if he - and not the threat we face as a civilization - were somehow the issue. You hear it echoed in the callow obliviousness of a Maureen Dowd or the brutal lies of Michael Moore or the cheap condescension of the intelligentsia. You see it in the poisonous symbolism of some of the anti-war demonstrators. I keep thinking that this obsession with Bush is a way of avoiding the awful choices in front of us. But the choices are still there.</I><BR/><BR/>Andrew Sullivan, January 2003.<BR/><BR/>Yeah, wack-jobs abound.Steve M. Galbraithhttps://www.blogger.com/profile/01728237625873443198noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-39004968964539493432009-01-16T17:00:00.000-06:002009-01-16T17:00:00.000-06:00AJ,The crickets are the result of egg on the face,...AJ,<BR/><BR/>The crickets are the result of egg on the face, not fifteen years.<BR/><BR/>[DBQ rolled out a whopper.]Sprezzaturahttps://www.blogger.com/profile/14859397164637821056noreply@blogger.comtag:blogger.com,1999:blog-6329595.post-22694204359602750312009-01-16T16:55:00.000-06:002009-01-16T16:55:00.000-06:00DBQ:I am sure you have, at your fingertips, work d...DBQ:<BR/><BR/>I am sure you have, at your fingertips, work documents from 15 years ago :)I'm Full of Souphttps://www.blogger.com/profile/00241724007440718575noreply@blogger.com