Required reading

[unixronin]

Still think Obama is a moderate?  Want to see what kind of change he might bring?  Read all about it here.  Among other things, it turns out the Great New Hope Of The Left was personally instrumental in priming the banking crisis we're facing right now, representing ACORN in the lobbying drive that forced the strengthening of the Community Reinvestment Act and started the whole subprime-mortgage ball rolling.

(Pointer from the esteemed radarrider)

Comments

[jmkelly.livejournal.com]

The main point of CRA was to stop the practices such as redlining -- refusing to make loans for properties in certain areas (or for applicants of color), no matter how good the applicant's credit was.

The main point of deregulation was to let bankers and brokers be as clever as they could be with securities, including mortgage-based securities and mixed bags of securities, credit-debit swaps, etc. They predictably out-clevered themselves, as they did in 1929.

I would like to see documentation for your contention that ACORN forced banks to take on bad risks. The CRA didn't force banks to disregard reasonable ways of assessing a loan applicant's likely ability to pay.

My take on it is, once banks didn't have to hold on to the mortgages they wrote, any loan officer who didn't write all the mortgages he could was a damned fool. In the short term, they'd be money for him; in the long term, they'd be Somebody Else's Problem. It turned real-estate loans into an extractive industry like logging or whaling, where it can be shown that absent regulation the winners will be those who quickly get in, grab all they possibly can, and get out. The "losers" are left holding bad securities. The real losers (we taxpayers) are bailing out the "losers," some of whom are paid more per hour than I am per year.

[unixronin.livejournal.com]

I would like to see documentation for your contention that ACORN forced banks to take on bad risks. The CRA didn't force banks to disregard reasonable ways of assessing a loan applicant's likely ability to pay.

No, it didn't. The article I posted the other day included a number of citations to ACORN slapping banks with lawsuits alleging that loan refusals were CRA violations. In a case like that, sometimes it doesn't matter whether you actually did what you did for the reasons you're accused of doing it, as long as you can't prove that you didn't have that motivation.

To put it another way, it wasn't CRA's fault per se, but CRA was misused by ACORN as a big stick to beat the banks up with.

My take on it is, once banks didn't have to hold on to the mortgages they wrote, any loan officer who didn't write all the mortgages he could was a damned fool. In the short term, they'd be money for him; in the long term, they'd be Somebody Else's Problem.

And that is the heart of the problem, isn't it? That's how we got into this mess — "Somebody else's problem."

In the end, we're all "Somebody else". To paraphrase, "It's not the bullet with your name on it that gets you, it's one of the fifty thousand marked 'To whom it may concern' or 'Somebody Else's Problem'."

[jmkelly.livejournal.com]

I read as much as I could of that article, and I have to caution you about that website: my tinfoil-hat alarm went off immediately, and never stopped. The author weaves a bunch of disparate facts into a single conspiratorial narrative -- and that's bullshit no matter who's doing it. It's bullshit when the Spartacist Youth League does it, it's bullshit when LaRouche does it. Real life is not that simple. I'm aware that the network the author describes looks complicated -- but compared to real life, it's way too simple.

[jmkelly.livejournal.com]

And yes, I'm sure ACORN used CRA to beat up banks that appeared to be denying loans to deserving minority applicants. That was part of ACORN's raison d'etre. Just like a loan officer that refused to take part in the deregulated-lending orgy, an ACORN organizer that declined to smack a bank with any weapon available to get loans for ACORN's constituency would be a damn fool, soon replaced.

And the banks had no incentive to fight back -- they could securitize the loans and palm them off on someone else. So the applicant got the loan, ACORN looked like a hero, the bank looked like it finally saw the light, and if the loan didn't perform, who cares, it's Someone Else's Problem now.

[unixronin.livejournal.com]

People who push things off as Somebody Else's Problem need to remember that there's roughly 300 million people in the US, and to more than 299 million of those people, THEY are Somebody Else.