Lending $$ poorly to rich folks created the current financial Crisis.. - New England Patriots Forums

***DarrylS*** · 10-07-2008, 02:17 PM

I am confident that the right wing circle jerks will not read this as there is great comfort in blaming Barney Frank as the responsible party along with Jimmy Carter.. but for those of you who choose to read it, it is another good read on how complicated this whole thing is..

Are Minorities to Blame for the Subprime Mess? | Newsweek Voices - Daniel Gross | Newsweek.com

Quote:

The Community Reinvestment Actapplies to depository banks. But many of the institutions that spurred the massive growth of the subprime market weren't regulated banks. They were outfits such as Argent and American Home Mortgage, which were generally not regulated by the Federal Reserve or other entities that monitored compliance with CRA. These institutions worked hand in glove with Bear Stearns and Lehman Brothers, entities to which the CRA likewise didn't apply.

Real World · 10-07-2008, 03:04 PM

Let me say before I opine that I've consistently said that there is blame on all sides here. That being said, the article has some real flaws. First off, lending of any kind to people who can't afford it is going to create a mess of the market. When you infuse any market with artificial cash/credit, you cause inflation. The housing market is no different. So tossing cash artificially into the subprime market, helped fuel the inflation of home values. It helps create a sellars market. Second, he sites the Nehemiah housing program, which took place 8 years ago, when home prices were a fraction of what they are now. I bought my home 7 years ago, so I know. Furthermore, the Nehemiah housing program is a mass produced, single family community, orchestrated with church guidance, that specifically targets lower income owners. It's a privately run, privately funded charity organization. It's really not a good example of the overall, everyday market.

Wildo7 · 10-07-2008, 03:09 PM

the premise of the "blame the CRA" crowd is that these companies were forced to lend to people they didn't think could afford to pay it back. But they were aggressively lending in a PREDATORY fashion by going after these people and using fine print and variable interests that they knew people weren't paying attention too. That has absolutely zero to do with the CRA.

Real World · 10-07-2008, 03:15 PM

Quote:

Originally Posted by Wildo7

the premise of the "blame the CRA" crowd is that these companies were forced to lend to people they didn't think could afford to pay it back. But they were aggressively lending in a PREDATORY fashion by going after these people and using fine print and variable interests that they knew people weren't paying attention too. That has absolutely zero to do with the CRA.

How can you say it has nothing to do with the CRA, when the CRA was explicitely desgined to ensure that people with undesirable credit were given loans. I doubt that the intention of the CRA was to create a financial crisis, or give ammo to predatory lending, there I'll agree, but you can't pass flawed legislation and hope for the best. Like I said all along, I think that there are people to blame in all kinds of places.

Wildo7 · 10-07-2008, 03:23 PM

Quote:

Originally Posted by Real World

How can you say it has nothing to do with the CRA, when the CRA was explicitely desgined to ensure that people with undesirable credit were given loans. I doubt that the intention of the CRA was to create a financial crisis, or give ammo to predatory lending, there I'll agree, but you can't pass flawed legislation and hope for the best. Like I said all along, I think that there are people to blame in all kinds of places.

Because the CRA didn't regulate the vast majority of banks responsible for variable interest loans, and the majority of at risk loans aren't held by the minorities that the CRA was intended to help.

***DarrylS*** · 10-07-2008, 03:47 PM

There was a piece on 60 minutes last Sunday nite.. Wall Streets Shadow Market...

A Look At Wall Street's Shadow Market, 60 Minutes: How Some Arcane Wall Street Financial Instruments Magnified Economic Crisis - CBS News

Quote:

It started out 16 months ago as a mortgage crisis, and then slowly evolved into a credit crisis. Now it's something entirely different and much more serious.

What kind of crisis it is today?

"This is a full-blown financial storm and one that comes around perhaps once every 50 or 100 years. This is the real thing," says Jim Grant, the editor of "Grant's Interest Rate Observer."

Grant is one of the country’s foremost experts on credit markets. He says it didn't have to happen, that this disaster was created entirely by Wall Street itself, during a time of relative prosperity. And they did it by placing a trillion dollar bet, with mostly borrowed money, that the riskiest mortgages in the country could be turned into gold-plated investments.

Here is the You Tube Version.. it is very complicated, but greed is the underlying factor..

YouTube - Wall Street's Shadow Market