This video above will shed some light on this whole issue.. A very good compilation of c-span clips that if you haven't seen them, you don't know what is going on.
Here some more good info on Wikipedia about what CRA is incase you thought it might mean the Celera Corporation in NASDAQ or the Computing Research Association or the Canada Revenue Agency (yes I know sometimes the pages get hijacked with bad info but I think this one so far is accurate)
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
Quote:
Originally Posted by BigRigMike
Wow it almost looks like the old political forum has returned. I don't know how the last one ended because I was gone the weekend it was deleted.
As for CRA it did not specify that you have to take risky loans it said you need to apply the same criteria to everyone. So if you are chartered in NYC you can not enact a rule that says you will not grant mortgages to homes between 110th and 130th.
http://www.federalreserve.gov/dcca/cra/
"Nor does the law require institutions to make high-risk loans that jeopardize their safety. To the contrary, the law makes it clear that an institution's CRA activities should be undertaken in a safe and sound manner."
And as for Fannie and Freddie being the main players. 84% of sub prime mortgages were done by the private sector.
Only one of the top 25 sub prime lenders in 2006 was directly subject to the housing law. |
I think you are only looking at one of the many reforms that CRA has gotten and ignoring the beginnings of it. Perhaps you are looking at it sometime mid 1995-1998 in your numbers. in 1992 if you take a look at the timeline in wikipedia is when the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 which was not supposed to be part of CRA passed.
taken from wiki below,
Although not part of the CRA, in order to achieve similar aims the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 required Fannie Mae and Freddie Mac, the two government sponsored enterprises that purchase and securitize mortgages, to devote a percentage of their lending to support affordable housing.[9]
In October 2000, in order to expand the secondary market for affordable community-based mortgages and to increase liquidity for CRA-eligible loans, Fannie Mae committed to purchase and securitize $2 billion of "MyCommunityMortgage" loans.[20][21] In November 2000 Fannie Mae announced that the Department of Housing and Urban Development (“HUD”) would soon require it to dedicate 50% of its business to low- and moderate-income families." It stated that since 1997 Fannie Mae had done nearly $7 billion in CRA business with depository institutions, but its goal was $20 billion.[22] In 2001 Fannie Mae announced that it had acquired $10 billion in specially-targeted Community Reinvestment Act (CRA) loans more than one and a half years ahead of schedule, and announced its goal to finance over $500 billion in CRA business by 2010, about one third of loans anticipated to be financed by Fannie Mae during that period.[23]
I don't know what your point was by mentioning that Freddie and Fannie would only constitute 16% of all loans and 84% of sub prime mortgages were done by the private sector. I'm guessing you are trying to downplay the Governments roll in all of this by ordering Fannie and Freddie that they must at least have 50% of their loans must go towards people who could not pay their loans and to keep doing this until the projected numbers by 2010. Now we know the numbers are greater than that... More than one third by 2010...I guess you're right, the private sector is mostly to blame..