NBER: CRA and other leftist policies lead to mortgage collapse

Those who are regular readers of Political Arena are not surprised by this as this writer has penned over a dozen articles on this very subject.

The piece below is certainly written with a partisan attitude, but in this case the facts justify the arguments within the article. Multiple analysis from the New York Times, Dr. Thomas Sowell, The Wall Street Journal, Investors Business Daily and many others have come to this same conclusion as the evidence is simply overwhelming.

UPDATE – More from IBD:

Robert Moon:

A new study from the widely respected National Bureau of Economic Research released this week has confirmed beyond question that the left’s race-baiting attacks on the housing market (the Community Reinvestment Act–enacted under Carter, made shockingly more aggressive under Clinton) is directly responsible for imploding the housing market and destroying the economy.

The study painstakingly sorted through failed home loans that caused the housing market collapse and identified an overwhelming connection between them and CRA mortgages.

Again, let’s review:

-President Bush went to Congress repeatedly for years warning them that Fannie Mae and Freddie Mac were going to destroy the economy (17 times in 2008 alone). Democrats continuously ignored him, shut down his proposals along party lines and continued raiding the institutions for campaign contributions on their way down.

-John McCain also co-sponsored urgently critical reforms that would have prevented the housing market collapse, but Democrats shut that down as well, along party lines, and even openly ridiculed anyone who suggested reforms were necessary…to protect their taxpayer-funded campaign contributions as the economy raced uncontrollably toward the cliff.

-No one was making bad loans to unqualified people until Democrats came along and threatened to drag banks into court and have them fined and branded as racists if they didn’t go along with the left’s Affirmative Action lending policies…all while federally insuring their losses. Even the New York Times warned in the late 1990s that Democrats continuing to force banks into lowering their standards would lead to this exact catastrophe.

-Obama himself is even on the record personally helping sue one lender (Citibank) into lowering its lending standards to include people from extremely poor and unstable areas, which even one of the left’s favorite blatantly partisan “fact-checkers,” Snopes, admits (while pretending to ‘set the record straight’).

-Even The New York Times admitted that there is “little evidence” of any connection between the “Republican” deregulation measures Obama blames, like the Gramm-Leach-Bliley Act (signed into law by a Democrat), and the collapse of the housing market.

[Political Arena Editor’s Note: The Gramm-Leach-Bliley Act passed almost unanimously]

2 thoughts on “NBER: CRA and other leftist policies lead to mortgage collapse”

  1. Is this a joke? The graph tries to imply that the rule change in 1995 made banks make CRA mortgage commitments to third parties. The rule change says exactly the opposite. Here’s a quote from it

    “The CRA requires the agencies to assess an institution’s record of helping to meet the credit needs of its community, not to enforce privately negotiated agreements. Therefore, an institution’s record of fulfilling these types of agreements is not an appropriate CRA performance criterion.”

    Political Arena Editor Responds:

    Hello Art, respectfully what you are saying here amounts to a distinction without a difference. Banks could raise their CRA rating the most by giving bad loans or high risk loans to inner city minorities, often on properties that were not worthy of such loans. Reno and Cuomo said on video that they were enforcing CRA [read abusing] in such a way to be an affirmative action program for home loans (with the depositors money and ultimately with YOUR money).

    If a bank wanted to acquire another bank, or expand its operations fedgov was crystal clear that no such activity would be allowed by federal regulators unless the bank had a high enough CRA rating. Nothing I just told you, as a matter of the record, is in dispute.

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