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DemocRats on Path to Repeat Housing Disaster

With all the attention paid to the health care battle, ACORN, and the president's "Full Ginsburg" appearances on five Sunday talk shows, few people noticed a hearing with an exceedingly boring title -- "Proposals to Enhance the Community Reinvestment Act" -- held last week in the House Financial Services Committee. But the session marked a key moment in the ongoing battle between Republicans and Democrats over what caused our current financial woes -- and how we might best avoid getting into the same trouble again.

At the hearing, and in others across Capitol Hill, Democratic majorities are pressing hard to expand some of the very policies that led to the reckless home lending that in turn helped lead to the great financial meltdown. If Chairman Barney Frank and his fellow Democrats have their way, we'll do it all again -- and more.

At issue last week was H.R. 1479, the Community Reinvestment Modernization Act of 2009, sponsored by Democratic Rep. Eddie Bernice Johnson. It would expand and strengthen the 1977 Community Reinvestment Act, which required banks to make loans in low-income areas that many lenders had traditionally shunned.

After the meltdown, some conservatives blamed the CRA for almost solely causing the crisis by requiring banks to make risky loans to unqualified borrowers. It was an unfair charge. "CRA had at best an incremental role in the U.S. housing debacle," says J.D. Foster, an economist at the Heritage Foundation. But CRA did help create the conditions in which disaster could occur.

The problems began in the 1990s, when Congress made it harder for lenders to do business if they had not passed the CRA "exam" -- that is, if they had not met the government-imposed standards for loans to low- and moderate-income borrowers.

"From 1995 on, there was an incredible push by the Clinton and Bush administrations in every way they could -- CRA, Fannie Mae, Freddie Mac, and other ways -- to increase the homeownership rate," says Russell Roberts, a professor of economics at George Mason University. "What that did was to push up the price of housing, and that made it imaginable to lend money to people you never would have lent money to, on terms you wouldn't have done before."

In particular, Fannie Mae began to aggressively promote homeownership using the Community Reinvestment Act to give loans to people who couldn't afford them. Fannie went to bankers and said, make as many CRA loans as you can; we'll buy them and take them off your hands. "Our approach to our lenders is 'CRA Your Way,' " top Fannie executive Jamie Gorelick told the Mortgage Bankers Association in 2001. "Fannie Mae will buy CRA loans from lenders' portfolios; we'll package them into securities; we'll purchase CRA mortgages at the point of origination. ..."

Fannie promised to buy billions and billions of dollars worth of CRA loans because it was under pressure to do so from the Department of Housing and Urban Development, which in turn was under pressure from Congress, which set ambitious quotas for low- and moderate-income loans.

The policy ended in a lot of people losing their homes. Now, Johnson's bill would ensure more of that by applying CRA's lending requirements not just to banks but to non-bank institutions like credit unions, insurance companies, and mortgage lenders. It would also make CRA explicitly race-based by, in Johnson's words, "requiring CRA exams to explicitly consider lending and services to minorities in addition to low- and moderate-income communities."

Republicans on the Financial Services Committee strongly oppose the plan. "Instead of looking to expand the number of institutions that must abide by CRA regulations, I think we should reassess the role this and other government mandates played in the financial collapse and consider scaling it back," California Rep. Ed Royce said at the hearing.

In private conversation, other Republicans were more emphatic. "There is clearly arguable evidence that the CRA is at the root of this financial meltdown," said one GOP committee member. "So what do they do? They try to expand CRA."

That's an overstatement of CRA's role in the housing mess, but it's right about the Democratic plan. Denying that CRA, Fannie and other institutions played any role in setting the stage for disaster, they're proposing more of what helped get us into trouble in the first place. It's no way to fix the problem.


Click to view image: 'd6df1082e01a-1aaaafrank.jpg'

Added: Sep-23-2009 
By: MarkusMarone
In:
News
Tags: DemoCrats, Bwaney Fwank, Losers, Scumbag Politicians
Views: 6034 | Comments: 16 | Votes: 2 | Favorites: 3 | Shared: 0 | Updates: 0 | Times used in channels: 1
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  • Barney Frank ran a homosexual prostitution ring out of his TAX PAYER FUNDED APARTMENT in DC.

    Got BUSTED doing it.

    And now he is one of the most powerful men in the United States of America.

    Suffer you stupid American sheeple...you get everything you deserve.

    Posted Sep-23-2009 By 

    (6) | Report

    • lmao a homosexual prostitution ring....

      You sound like some annoying evangelist who is bitter that a black man got in office.

      lmao, the "homosexual" comment just tarnished your credibility.

      Posted Sep-23-2009 By 

      (-3) | Report

    • fortunate for me that you dont have any credibility to tarnish in the first place...lol.

      so anyone who speaks against barney fwank is SOMEHOW an evangelist in your tiny little mind??

      how convenient, if you're retard.

      look, if you dont want to believe me, just do a little research...is that asking too much, or do you get all your information slurping up left wing propaganda from msnbc?

      /dismissed

      Posted Sep-23-2009 By 

      (3) | Report

    • LMAO at the libs who protect that scumbag fairy, Bwaney Fwank. Not a shocker libs don't have a problem with their politicians running brothels out of their homes at taxpayer expense. When you don't pay any taxes, are a lazy welfare leach, and have zero morals, you say stupid shit like you just spewed. FYI, I am an atheist. LMAO at libtards and their warped sense of reality.

      Posted Sep-23-2009 By 

      (2) | Report

    • i honeslty think he's just CLUELESS...and really thinks im full of shit and telling a lie.

      These obama boot licking cultists and peasants vote democrat for a REASON...They're retarded.

      Posted Sep-23-2009 By 

      (2) | Report

    • He knows, he just has his panties in a twist because he probably frequented Bwaney's Bwothel on the regular before it was shut down.

      Posted Sep-23-2009 By 

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  • The dhimmicrats consciously want to rob and kill the white middle class in favor of the "damned of the Earth".

    Posted Sep-23-2009 By 

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  • They're deregulating financial markets and allowing mortgages to be bundled together as securities while simultaneously supporting derivatives unscrupulous lending activities?

    The CRA only applied to depository institutions. Something like 80% of all sub-prime mortgages were done by private companies like countrywide. Of course it's the poor people who need help with housing. It couldn't be corrupt corporations that are devoid of anything even resembling authority.

    Posted Sep-23-2009 By 

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  • You cannot repeat something that is still in progress.

    Posted Sep-23-2009 By 

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  • While it may be true regarding the percentage of influence the CRA had on the melt down, there are other related factors that drive that percentage up. Insurance giant AIG, for example, actually insured derivatives of banks and then received government bail-out funds when they turned to s**t and they had to pay out. Goldman Sachs was one of those banks and that is why they, after receiving bail-out funds also, were crowing about quarterly profits just two quarters after recing government funds w More..

    Posted Sep-23-2009 By 

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  • Why does this person still have a job ? ? ?

    Posted Sep-23-2009 By 

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    • Because his constituency is primarily Massachusetts liberal trust fund babies who could care less about things like this. He's also a flamer so the libs love him.

      Posted Sep-23-2009 By 

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  • http://tinyurl.com/5dn695

    ACORN: Who Funds the Weather Underground%u2019s Little Brother

    CAUTION to PROGRESSIVES: You must have some intelligence and understanding of English to read this report

    Posted Sep-23-2009 By 

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