Community Reinvestment Act-REWIND!
The Patriot Flag I am flying today is the Ft. Moultrie Flag. Here’s why …
By the Way: Happy Constitution Day!
Talk Risking Liberty
I can understand making the first mistake, I’ve had my share on that scoreboard .. but real stupidity is making that same mistake again and again… and then, believe it or not, again! But I’m supposing that people like Barney Frank have some semblance of intelligence … big mistake. Barney is introducing the “Community Reinvestment Act of 2009“. Here we go again … REWIND!
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What is/was The Community Reinvestment Act?
Redlining. Congress passed the act in 1977.
1936 Phily Redline Map
The CRA was initially signed into law by President Jimmy Carter back in 1977. Its “intention” was a normal liberal reaction to mathematics used by the banks. Certain geographical areas had a history of not repaying loans made to them by the banks. So the banks “redlined” the geography not allowing loans from them in those areas. The reason? The loans were not repaid. So this sets the groundwork. Whether you think redlining was right or wrong is your choice. (I don’t loan money to friends that won’t pay me back … am I redlining?).
Government-mandated loans: But the government solution to redlining was where the problem started. Redlining, with the CRA became illegal. That’s OK, so far. But then the government decided that to prove the banks were not redlining, they had to have a certain percentage of loans within the previously redlined areas. This meant the banks HAD to give out a certain percentage of housing loans where they KNEW they were not going to be repaid. If they refused, and didn’t have a good “score” … they were not allowed to increase in size, not allowed to start new branches and not allowed to partake in governmental financial processes. In other words, give out bad loans or go out of business.
From “Good Intentions” to “Financial Disaster” Under Carter it was mostly “initiated” (good intentions and all) … but under President Bill Clinton, it became used as political clout and was his way of securing the black vote in poor communities. Under Clinton, the CRA was put onto steroids.
Gather.com: In 1995, as a result of interest from President Bill Clinton’s administration, the implementing regulations for the CRA were strengthened by focusing the financial regulators’ attention on institutions’ performance in helping to meet community credit needs.
Millions of dollars were forced to be given to loan applicants who had no way of paying back such loans. And this so everyone could live in “affordable housing.” (This is Barney Frank’s mantra still today). People could not pay back the loans. The banks tried to find ways of “selling” these bad loans to other people … and some of those institutions like Fannie and Freddie (government-run) bought them, as did many other financial institutions. It was these “toxic assets” that caused us to have to bail out the financial industry were THE LOANS GIVEN TO PEOPLE WHO HAD NO QUALIFICATION TO PAY IT BACK! In a second-layer way, this was the government giving housing to unqualified people. Its not about “affordable” housing, its about “free-from-the-government housing.” Why didn’t they just say and then just give houses to poor people, charging the hard-working-tax-paying citizens for the bill?
The Community Investment Act of 2009
The CRA of 2009 is HR 1479 (Full Text Here) states:
To enhance the availability of capital, credit and other banking and financial services for all citizens and communities, to ensure that community reinvestment requirements are updated to account for changes in the financial industry and that reinvestment requirements keep pase as banks, securities firms, and other financial service providers become affiliates as
a result of the enactment of the Gramm-Leach-Bliley Act, and for other purposes.Sec 3 Purposes
The purposes of this act are as follows:
1. To enhance the availability of financial services to citizens of all economic circumstances and in all geographic areas.
2. To enhance the ability of financial institutions to meet the capital and credit needs, and needs for other banking and financial services of all citizens and communities, including and especially minority and los- and moderate-income communities and populations.
3. To ensure that community reinvestment keeps pace with developments in the financial industry and with the affiliation of banks, securities firms, and other financial service providers as provided by the Gramm-Leach-Bliley Act
Why are we repeating a disaster?
Barney Frank
How could Barney Frank even be credible after what we have just watched happen to our financial security? What I fail to understand is why, after what we have just learned and what we have just gone through with the housing market crisis … why in the HELL would we propose to “do it again,” or even “update a FAILED policy?”The proposal Barney Frank has made is lunacy at worst. Why would we “enhance” the cause of the 2nd worst financial disaster in the history of the USA. Like I said, hey people make mistakes, but to PURPOSELY make the mistake a second time is sheer lunacy.
What to do now? Go meet the “Lib Next Door”
Write your congressman … how often have you heard that and has it helped much? Not really. The way things are “getting” done today is by getting the public ENRAGED about such lunatic antics of our congress. The “problem” isn’t congress, that is a RESULT. The “problem” is probably your neighbor, the “Lib Next Door!” Someone who will say .. “oh yes, but we have to help all those poor people who can’t afford a home.” If they want to help, then are they offering a free room at their house, or would they rather solve the problem by throwing MY money at it…again, and again, and now again?
I already gave.
Last year, I paid almost half of my retirement savings to these people the first time when the market crashed on top of my hard-earned retirement nest egg. If they want to pay for other people’s housing let them … but don’t take it out of MY taxes … I already “gave” last year. You want to make the same mistake again … do it with YOUR money.
Go meet the “lib next door” … convince them of the lunacy going on. Odds are they’ll not even know about this or what the CRA was or even is today. Give them FACTS … if we ever had the facts that the CRA causes a financial disaster, I’d think we’d have it figured out. Might not even be to difficult for the “lib next door” to understand.
Let’s not repeat this financial disaster AGAIN …
