I believe a recent essay that appeared on Slate.com is worth reading carefully.
One item of interest is the role of the Community Reinvestment Act. Here's a fact: CRA requirements apply almost exclusively to regulated, depository banks and not to the unregulated financial institutions that contributed most to the current meltdown. Interesting stuff.
Poor folks aren't to blame. We serve thousands here. Almost no one under 50 in my world owns a home.
Here's an excerpt from the Slate essay by Daniel Gross:
Look: There was a culture of stupid, reckless lending, of which Fannie Mae and Freddie Mac and the subprime lenders were an integral part. But the dumb-lending virus originated in Greenwich, Conn., midtown Manhattan, and Southern California, not Eastchester, Brownsville, and Washington, D.C. Investment banks created a demand for subprime loans because they saw it as a new asset class that they could dominate. They made subprime loans for the same reason they made other loans: They could get paid for making the loans, for turning them into securities, and for trading them—frequently using borrowed capital.
At Monday's hearing, Rep. John Mica, R-Fla., gamely tried to pin Lehman's demise on Fannie and Freddie. After comparing Lehman's small political contributions with Fannie and Freddie's much larger ones, Mica asked Fuld what role Fannie and Freddie's failure played in Lehman's demise. Fuld's response: "De minimis."
Lending money to poor people doesn't make you poor. Lending money poorly to rich people does.
Read the entire article here.
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22 comments:
Larry, thanks for defending this again. However, the people you're targeting this to are not going to change their mind. They hold certain assumptions about the poor and will try to pin every problem and stereotype on them until places like CDM stop calling their attention to the poor.
Thanks for this, Larry. I heard this exact argument blaming Carter, Clinton and the CRA made this week by the station manager of our local AM talk radio station. Sometimes its hard to know where to start in trying to have an intelligent discussion about the issues relating to the poor.
The Delta expultion hearing in ANIMAL HOUSE:
Otter: Ladies and gentlemen, I'll be brief. The issue here is not whether we broke a few rules or took a few liberties with our female party guests -- we did. But you can't hold a whole fraternity responsible for the behavior of a few sick, perverted individuals. For if you do, then shouldn't we blame the whole fraternity system? And if the whole fraternity system is guilty, then isn't this an indictment of our educational institutions in general? I put it to you, Greg ... isn't this an indictment of our entire American society? Well, you can do what you want to us, but we're not going to sit here and listen to you badmouth the United States of America! Gentlemen!
(and they all walk out humming a patriotic tune)
It's the poverty INDUSTRY thats been caught with its hand in the cookie jar.
c hand - I see rhetoric, but no evidence of what you're saying. But at least now you have stated your prejudice -- that you think people serving the poor (i.e. CDM) are corrupt thieves.
Daniel, I doubt that you took a single penny. But Raines at FM seems to have been less inoccent.
Sometimes your good intentions will produce bad results. Pure motives(where they were pure) do not absolve those responsible for pushing bad loans.
Just wondering, have you condemned the greed and corruption of Harold Raines? Is he included with Wall Street?
The government MANDATED for lending institutions to make risky loans so I agree it's not fair to blame poor people for taking advantage of the situation. They didn't even have to prove they had a job, much less adequate income.
"Sometimes your good intentions will produce bad results."
So let's talk about the good intentions of the lending industry... also known as GREED. How did GREED get us into this mess? How did lending institutions make terrible loans, package them, and sell them, with no disclosure of the value of those loans to other institutions? How did corporate American gorge itself on risky behavior and a complete lack of financial prudence to create this mess for everyone?
c hand and Chris -- Every economist out there acknowledges the breadth and depth of this problem. You're obsession with focusing on these tiny minutiae in an attempt to pawn the economic crisis off on the poor is completely laughable and reveals your serious prejudice against the poor and those who would try to assist the poor. This is the true definition of elitism.
The only reason I can fathom that you post on here is because you either have a vendetta against someone or you find joy in tearing down every effort to assist the poor and marginalized of this country.
C hand you have convinced me that you are not even literate enough to understand what is really happening. Considering the movies you watch and quote I am not surprised.
Chris you cannot blame a small number of low income individuals for this mess either. Did either of you bother to read the article? It appears you are both going to believe what you want to believe no matter what the truth is.
Those bad loans you refer to are not exclusively made to low income or minority individuals. The banking, investment firms, private investors, brokers, builders, real estate industry and anyone else who could jump on the bandwagon saw an opportunity to take advantage of loopholes and gambled.
They were loaning money to anything or anyone who walked through the door to make a buck and no one forced them to do it. People were also buying up properties to flip as fast as they could and got stuck with properties they cannot sell. This is the result of a system running amuck because they all wanted their piece of the pie. It was not exclusive to any one population because it did not matter to the mortgage companies and banks who got financed as long as they made their money and sold off the risk to. Believe me, many people did make a lot of money until the bubble burst and all of them did not end up losing.
Take the time to investigate the numbers and you might understand or does the truth really matter to you?
Dear Larry James, (if that's your real name), Congratulations on continuing your class warfare scheme. From your prose, one must assume that you have a marxist leaning. Is that accurate? Perhaps, "exiting the closet" would help clear the air.
anon 5:22 - is your definition of "not even literate": someone who has a different view/opinion as mine and the opinion is not left leaning socialist? I find it almost laughable how over the past few weeks we have heard criticism over the tone of comments on this board, but not a peep when a like -minded liberal throws out nonsense like you have thrown out. My guess is CHand and Chris can debate circles around you.
By the way, where are all of the ACORN backers now that we all know that ACORN has been caught red handed with voter fraud all across the country. WHat an organization! Interesting that Barry is alinged with ACORN, has worked with ACORN and trained ACORN members. But, we have nothing to fear or complain about since Barry is the Messiah and is untouchable.
The mortgage crisis was the result of a number of problems, INCLUDING the Democrats pressure on companies to lend to unqualified buyers or face discrimination claims. No matter how hard you deny it, it is the truth based on the FACTS. Now, go ahead and call me an idiot, racist, bigot, nut or the many other labels you cast on folks who dare to disagree with the cult here on this Blog.
5:29 - You're questioning Larry's identity while posting anonymously yourself. Ironic? Second, just because something is not unfettered, free-market capitalism does not make it marxist, socialist, fascist, communist, or whatever term you want to throw out there.
5:37 - You have been duped by the Republican machine. You insist on the CRA being a major factor -- it is not. 1 out of 25 lending institutions involved in subprime lending fall under the CRA -- all of lenders simply made awful loans to middle class people way beyond their means, because those lenders knew they would simply sell off these loans, make a quick buck, and be absolved of any financial risk. No one held a gun to the heads of these lending institutions.
Second, you obviously have bought the Republican line on ACORN. ACORN has consistently turned in fraudulent applications. What good is a fraudulent application anyway? Is Darth Vader actually going to be able to vote on election day?
I find it unsurprising that your two issues (ACORN and CRA) are the same ones that Rush Limbaugh spews hatred about every day.
I will not call you any of those words. Doing so would legitimize your ability to feel like a martyr. Anyone who cannot even sign a name to their opinions is definitely not a martyr.
Daniel, of course you are right. CRA is only part of the problem. The Fed Reserve was too loose with monetary policy, tax law skews owning over renting, and people made bad mistakes and bad loans. It was a perfect storm with lots going wrong.
I'm sorry you think I hate poor people. I don't. I appreciate that you may do good work for the poor even if I oppose some of your methods in the public arena.
I don't want to be obsessed but occationally I would like to respond.
Larry names the topic here. To me, he seemed obsessed with placing blame everywhere except on the pure hearts of he and his allies.
Most misunderstand my intent. My only point was to say that the very poor, with whom we work daily, are not the problem, nor is the requirements of the CRA. I know that some will never be open to the reality that I see daily. Those who cannot take criticsim without resorting to extreme accusations will never be convinced. So be it.
If CRA does only good and never harm, why not call for doubling or tripling its requirments?
Please, c hand - A little milk in your tea makes the tea better; triple the milk makes it, well, milky. A little salt on your ______________. You get the idea. This is not a difficult concept. Using extremes as thought exemplary does not advance the discussion.
I cannot fathom why everyone here gets their panties so in a bunch, about EVERYTHING, except that this has sadly become the norm in American political discourse. None of you are martyrs because someone else strongly disagrees with you, so please stop crying in your soup. It's just tedious.
Go away....
This is all so silly.
I see lots of people lobbing bombs, making personal attacks that have nothing to do with the issue at hand, I even saw one personal make character judgements about people who disagree with them. Not a whole lotta Christ going on here. And, knowing how I've come across in my posts since I've been around here, I feel like that's telling.
DGray,
I especially gotta say something to you, since we actually know each other in the real world. You are much smarter than you're appearing in these comments. When you start authoritatively assigning motives to people, like people that post here
"find joy in tearing down every effort to assist the poor and marginalized of this country."
or when you said to c hand that he "thinks people serving the poor are corrupt theives"
These, from my perspective, are the argumentative tactics of a low rate right wing talk show host. Frame questions and statements in ways that assign guilt to people that they are unable to respond to effectively, even if its totally untrue.
"So, when did you stop beating your wife?"
Also, you called out someone for being anonymous, and attempted to demonize their position by accusing them of trying to be a martyr. Again, you have no authoritative knowledge of their intentions, but by responding in the way you do, you make it even more difficult to have honest dialogue.
This is why I've stepped back from commenting, because I realize that I have trouble responding to things in a tactful way that encourage dialogue, and the fact that so many on this blog have the same problem, it just makes for a bad situation. Its too bad, because I believe an honest civilized dialogue here would be beneficial to all involved, yet we end up with ad hominum attacks, straw man arguments, and political talking points... all on a blog that, whether we like it or not, is representing followers of the way all over the world.
Larry--
I am thankful for you and your servant heart. You move in circles and touch lives that 98% of us who read your blog would struggle to touch. It's easy to throw rocks and much harder to dig in and make a change. I am so glad you've chosen the second and harder of the two. Thank you for inspiring so many!
PS: And...thank you for having patience with the ridiculous banter that sometimes happens here
ANON 6:08 - I am the one you write about. I don't listen to Rush Limbaug and I am a Democrat. I have not been duped by anyone. Instead, I have done my due diligence on ACORN and the mortgage crisis and choose to make an opnion based on the facts instead of following 99.9 percent of Democrats who refuse to place any blame on their pet organizations and protect their turf at all costs. You could say I am not in denial.
Brandon Scott, thanks so much for your kindness and your encouragement.
Anon 6:08, not sure what all you have in mind. That said, I spoke to the market president of one of the largest banks in America this morning. He volunteered--I did not bring up the subject--that loans via CRA did not cause the problem we are not experiencing. I asked him what did. He said simply, "Greed."
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