Why do people insist that the mortgage meltdown was caused by the Community Reinvestment Act?

Question

THe CRA was a small program for a very limited number of lower class people. The meltdown occurred because of flippers and the equity bloated middle class. The repeal of the Glass- Stegal Act did more than the CRA.

Answer 1

I agree The Commodity Futures Modernization Act of 2000 which made regulation of those credit swaps illegal is responsible for setting the stage but there were plenty of warnings--Enron being the first.

Answer 2

The repeal of the Glass-Steagall Act broke down the barriers between investment banks and commercial banks. It didn't cause the mortgage meltdown, though it certainly allowed it to spread to the banking industry.



The cause of the mortgage crisis was the introduction of subprime lending, which was forced on mortgage lenders by Congressional Democrats in the post-9/11 atmosphere of "charitable to a fault" business practices. This is why conservatives resist government regulation of private industry. No business, bank, or lender gives money to someone who can't pay it back. It's just bad business. That's where the seeds of "toxic assets" first began to grow.

Answer 3

It's because of the overall impact of that Act. Sure directly it only applied to certain groups. However, it also made banks scared of being accused of practicing discriminatory lending. To be safe, they opened up lending and starting handing out loans like candy regardless of credit worthiness.





Then things like the Financial Institutions Reform Recovery and Enforcement Act of 1989 made it worse by allowing the CRA information on banks to be public knowledge. That allowed any lobbying groups to put pressure on banks to influence their lending practices.



Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 further impacted this by tying interstate banking approval to the CRA "score" of a bank. Again this forced banks to fall in line or risk loss of support. And this still all started with the CRA.



I don't know what you consider a very limited number of lower class people, but the CRA impacted probably somewhere in the millions of people and likely $500 billion in loans or more. Heck from 1993 to 1998 alone it sounds like $460 billion in mortgage lending resulted from the CRA.

Answer 4

When 5/3 bank took over Old Kent bank of Grand Rapids, MI, my wife was laid off with over 5600 other people because the bank refused to make loans to people that did not have the means or wherewithal to pay their loan back.



Obama, the attorney, even sued banks that did not make these loans to low-income people.



ACORN's mission was to get these low-income people into homes.



The only thing was that these folks were set up to fail.



Now the whole nation is set up to fail.



We need more slogans and platitudes from the gov'mint dudes.



How about: Yes we can!

Answer 5

All of the above were responsible for it

However, the real problem is America's culture of debt.



Debt for this, borrow for that, pay you tomorrow for something else, no cash down, here's my Visa card. The results are very predictable. Debt is phony prosperity.



In the case of mortgages the biggest culprits are the 20, 30, and 40 year mortgages with little down which caused prices to skyrocket.

Answer 6

The act required banks to make loans to people that would not normally qualify under threat of law. Other lenders started lending to the same people because they would loose a lot of business if they did not. A lot of the people that got the loans can not pay the loan back and now the lenders are on the hook for a worthless loan. People do not pay their mortgage and they are foreclosed on.

Answer 7

it was a part of the cause for the failure at ,fannie mae and freddie mac did started the snowball rolling,all unsecured mortgages are to blame. but the biggest blame falls on the federal reserve which caused this problem on purpose

Answer 8

Read this New York Times article its pretty clear. "But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's" They seen this coming in 1999 and no one listened.

Answer 9

Mortgage meltdown was ENGINEERED by the CROOKS ON THE HILL !! Tax $$ were siphoned off to expand/fund Fanny/Freddy/HUD programs/ Community "assistance programs/ organizations. The $$ slipped into bills as earmarks/grants or expanded budget lines etc were designed to fund and implement social and political objectives.

...Congress ignored the reports that audited Fanny/Freddy and ACTIVELY blocked calls (by primarily REP)s to investigate the" fiscal irregularities and usage..." conclusion of the report. B.Franks,C.Dodd, +other treasury /justice partisans/officials later claimed a failure of oversight duh!

...Congress used the back door pipeline of SKIMMED TAX$ to lure WallStreet (WS) into the opportunity to create and ride a "profit wave".Both WS and the CROOK on the hill made great (personal profits).The Scam however has a second twist: WS did not realize that they would be sued/coerced into lending $$ to folks who cld not qualify or would default . The "community ..organizations and their legal "teams " mission was politically motivated! The "desire" was to PROVIDE housing and access to other programs at reduced or no cost . These folks "needed/deserved" a house ,utility subsidies, and would in turn be grateful supporters/voters.

...The SCAM like all SCAMs end ugly > Greed ,deceit by many (WS, Members of Congress and buyers*) grew and to the point where WS could no longer hide the toxic debt. WS demanded a bailout and got it!!! Congress and other officials deflected attention by spinning/ranting re; the the greed of WS gurus, Bush (who did call for reform/investigation ) and wailsfor all the victims (those who didnt read their contracts or took a "free house" with the idea that the "gov" was clearly giving it to them since they had no or limited employment/ assets ..(?they were just lucky they weren't like the other folks who saved,worked for years to qualify for a house purchase?).

...The false housing BOOM created by this SCAM put a lot of $$ into Many Pockets !! Many of those those reaping profits (investors,builders, real estate brokers , inspectors, business etc., ) CHOSE to overextend /purchase more /add grow their company etc.

...What NO One remembers is that There Are already FEDERAL PROGRAMS that assist the elderly, infirm/disabled ,single moms,youth services , food stamps,..etc., ALL funded by TAXPAYER $$. Back door Congressional programs or "support" of agencies or organizations Or MORE RECENTLY unpublished and UNREAD Legislation providing Tax ## for various entities authored by a few members is recognized by many as CRIMINAL FRAUD.

This nation rejected RULE by arbitrary laws (king George) and emerged as a free(and successful) Nation where the Government is SUBJECT to the will of the people! Opportunity(later free education) penalties based on the crime Not social or economic class /standing and the individual's freedom to pursue and acquire that which he/she desired were the tools provided; Success was not guaranteed simply that citizens could CHOSE how to use the fruits of their labor to secure themselves, their family and any other cause they deemed as worthy of support/ assistance etc. >>What was guaranteed was that the PEOPLE were protected from undue GOV oppression!!

Congress and many Politicians have CHOSEN to serve themselves, and misuse their positions TO ENGINEER or COERECE "support" for THEIR ideology,social or political beliefs. MONEY GREED, an addition to POWER games have replaced their oath to serve!

>>>>THEFT regardless of the "rational" or status of the perpetrators has never been well tolerated by" the people". This outrage sparked and bought INDEPENDANCE by blood and tears.

>>>>One (in the USA) makes his/her bed because they CAN CHOSE--They also suffer or enjoy their bed they worked to CREATE ! They can also CHOSE to wallow in self pity or get started on a remake! No One on this PLANET is guaranteed a life without loss,hardship,potholes to navigate around or perfect health!! In the USA individuals have the ability/freedom to chose how or if they want to "change" their life! The government was never designed to be the mommy that fixed everything or the dad that bailed you out when things didnt "go well"/work out.

..What next federal $$(+ a house,food, fuel, etc ) for the poor folks who lost all their $$ at the casino?? or dropped out of school because life in a gang was more fun and lucrative/teacher was bossy/mean

Remember Governments exist on taxes and trade.! What happens when taxpayers dwindle (or as some have said revolt) and trade with deflated currency is insufficient????

Who will care for the victims?

Answer 10

By blaming it on the CRA, they get to blame the Democrats, minorities and the poor. As long as they don't have to look for real answers and they get to blame their favorite scapegoats, they're happy.

Answer 11

Because Republicans like to blame poor people and minorities for all the country's problems.

Answer 12

Because Bill Clinton said it was his fault

Answer 13

Because they lie and refuse to admit that Wall Street went out of control securitizing mortgages with no oversight or checks and balances...

Answer 14

ignorance, racism, and unquestioned belief in whatever sean hannity tells them to think are a few possible reasons

Answer 15

Right on .......Agent Smith!!!!!

Answer 16

GOP talking point. They don't care if it is right as long as you are talking about it you aren't talking about something really important.