Are you through yet?

GET READY FOR A RECOVERY.

They point out that the historically STOCKS rebound before the economy does, and the economy does before jobs do.

Prepare now, to make a fortune in investments you make today, a year from now.

LBJ didn’t transfer a dollar of money into the hands of poor people, Gave them food stamps and housing supports, but in these cases, the money went DIRECTLY to the grocery stores and landlords who accepted HUD payments. It was the Republican president who invented the welfare check, in an attempt to get poor whites to shift their support from New Deal Democrats, to Nixon’s own deal.

Same thing occurred with the Community Reinvestment Act. Absolutely safe for its entire lifespan, it becomes a catastrophic mess under the control of a Republican President and a Republican majority Congress intent on creating their “Permanent Republican Majority”

“No warning can save a people determined
to grow suddenly rich.” – Lord Overstone
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Dry Rot in Bush’s Housing Plan
by Adrian Ash

“The reality of the situation is that an open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention…” – Hank Paulson, speaking at the China-US Strategic Dialogue in Shanghai, 3/7/2007

IT’S REALLY NOT their fault. With the best will in the world, things just kind of…you know…went awry.

“Problems that originated in the credit markets and first showed up in the area of subprime mortgages have spread throughout our financial system,” said President Bush last Friday, like he was talking about dry rot.

Just where did the moisture seep in, wetting the timbers and spreading fungus to all the beams and struts?

“The United States is fortunate in that our homeownership rate is at an all-time high,” announced Dubya himself in June 2003, “and low interest rates continue to encourage millions of Americans to become first-time homeowners.”

But this record-high homeownership rate just wasn’t high enough – and so that month marked not only the (first) final victory in the War of Terror. It also saw the Bush administration declare June 2003 to be National Home Ownership Month.

George W.Bush has been a big fan of such proclamations through both terms, from National Safe Boating Week to World Freedom Day…National Poison Prevention Week and Great Outdoors Month to National Diabetes/Adoption/Hospice/Alzheimer’s Awareness Month, all coinciding in November 2005.

http://www.safehaven.com/article-11353.htm

The Bush administration simply eliminated the regulatory agenda.

Again:

The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound operations. It was enacted by the Congress in 1977 (12 U.S.C. 2901) and is implemented by Regulation BB (12 CFR 228). The regulation was substantially revised in May 1995, and was most recently amended in August 2005.
Evaluation of CRA Performance
The CRA requires that each depository institution’s record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution’s application for deposit facilities.

http://www.federalreserve.gov/dcca/cra/

“Community reinvestment act had nothing to do with it.

So when Chris Dodd and Barney Frank put pressure on lenders to write mortgages to people that had lousy or no credit, that had no impact on the current situation? I’d like to believe that, but the evidence points the other way.”

They really had and have NO ability to pressure the banks to do ANYTHING without legislation. There was none. There is nothing in the act, or the actions of Dodd and Frank that FORCE bankers OUTSIDE of their communities to give Subprimes to people OUTSIDE OF THEM.

The changes that occured in the Community Reinvestment Act that resulted in this occured in 2005, under the Republican Majority Congress, and Under George Bush as president:

Neither the CRA nor its implementing regulation gives specific criteria for rating the performance of depository institutions. Rather, the law indicates that the evaluation process should accommodate an institution’s individual circumstances. 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.

http://www.federalreserve.gov/dcca/cra/

A home owner loses his home and the value of everything in it has to PROVE he owns the home to collect. He has to prove the value of all the items IN the home. Even if it was available, the homeowner rarely has access to a reasonable, affordable insurance that will pay him if the value of his property DROPS.

The purchaser of a CDO did not have to PROVE he owned investments in Mortgage Backed Securities to collect on the drop in the value of those securities. When the banks that gave those CDO’s could no longer PAY for all the CDO’s they gave, they went under, and the economy went with it.

Which is of course where a lot of the lost value of the economy went to. The bonuses, salaries and benefits of the executives.

Community Reinvestment Act had nothing to do with subprime crisis

Fresh off the false and politicized attack on Fannie Mae and Freddie Mac, today we’re hearing the know-nothings blame the subprime crisis on the Community Reinvestment Act — a 30-year-old law that was actually weakened by the Bush administration just as the worst lending wave began. This is even more ridiculous than blaming Freddie and Fannie.

The Community Reinvestment Act, passed in 1977, requires banks to lend in the low-income neighborhoods where they take deposits. Just the idea that a lending crisis created from 2004 to 2007 was caused by a 1977 law is silly. But it’s even more ridiculous when you consider that most subprime loans were made by firms that aren’t subject to the CRA. University of Michigan law professor Michael Barr testified back in February before the House Committee on Financial Services that 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision and another 30% were made by affiliates of banks or thrifts which are not subject to routine supervision or examinations. As former Fed Governor Ned Gramlich said in an August, 2007, speech shortly before he passed away: “In the subprime market where we badly need supervision, a majority of loans are made with very little supervision. It is like a city with a murder law, but no cops on the beat.”

Not surprisingly given the higher degree of supervision, loans made under the CRA program were made in a more responsible way than other subprime loans. CRA loans carried lower rates than other subprime loans and were less likely to end up securitized into the mortgage-backed securities that have caused so many losses, according to a recent study by the law firm Traiger & Hinckley (PDF file here).

Finally, keep in mind that the Bush administration has been weakening CRA enforcement and the law’s reach since the day it took office. The CRA was at its strongest in the 1990s, under the Clinton administration, a period when subprime loans performed quite well. It was only after the Bush administration cut back on CRA enforcement that problems arose, a timing issue which should stop those blaming the law dead in their tracks. The Federal Reserve, too, did nothing but encourage the wild west of lending in recent years. It wasn’t until the middle of 2007 that the Fed decided it was time to crack down on abusive pratices in the subprime lending market. Oops.

http://www.businessweek.com/investing/insights/blog/archives/2008/09/community_reinv.html

Another Bush foible. Eliminated the policing of sub prime loans and the banks started going hog wild giving them.