Northern Exposure
-
- October
- 9
The red meat republicans have been demanding the gloves come off, and Gov. Palin has been delivering. Understandably, the McCain camp is desperately trying to turn the economically sensitive polls around, but their strategy is not well thought out. For starters, calling a man who is running for President of the US un-American just leaves normal people scratching their heads. And doing that while those same people are watching their retirement nest eggs evaporate is self-destructive. In the current economic climate, a fact-free pit bull is likely to leave McCain merely frostbitten.
This entry was posted
on Thursday, October 9th, 2008 at 6:21 am by Matt Davies.
You can follow any responses to this entry through the RSS 2.0 feed.
| 
Bogus Discrimination Charges Led to Subprime Mortgage Crisis – Hans Bader.
Hans Bader graduated from the University of Virginia with a B.A. in economics and history and earned his J.D. from Harvard Law School
A lot of subprime mortgage loans are defaulting. A big reason why is that, to avoid discrimination charges, lenders gutted their traditional lending standards in order to loan money to people with bad credit (bad credit is more common in some minority communities, so refusing to lend money to people with bad credit is alleged to have a racially “disparate impactâ€). The Community Reinvestment Act, which punishes banks that don’t make loans in high-risk areas, is also a key reason why (it was enacted and then made even more onerous by the very politicians who are now shrieking about the mortgage crisis they helped create).
”...to avoid discrimination charges, lenders gutted their traditional lending standards in order to loan money to people with bad credit.”
Right. They didn’t do it to make money hand over fist, ignoring risk while fudging applicant qualifications. They did it to avoid discrimination charges.
Please Edwin, fade to black.
Oh and edwin, You can vote “one star” a thousand times if you want to, (ups my hits count!) but really, once is sufficient.
Hunan nature dictates that “Lord Baltimore’s†comment is undoubtedly true, but hecause of a liberal bias filter misses Hans Bader’s point. The question Bader addresses is“who started the fire?â€
Dear Mr. Davies,
To say my opinions do not influence the conduct of my six children would be inaccurate. Since most (but not all) share my opinion of your caricatures I have reminded them that in a democracy there is but one vote per person. I do, however, take full responsibility and assure you that where your caricatures are concerned democratic procedures will apply.
Fear not, since tomorrow they will all be back in school and I will be away for a time on business. In the interim you could do me a favor. Instead of the tiresome focus on politics could you think of a characture which illustrate the negative aspects of TV, computers and video games on young minds? Today was such a beautiful day and I cringe when I see them not taking advantage of such weather
Gus –
Nice assumption on the “liberal bias filter”. Very open-minded of you. It’s interesting that you assume I’m liberal. I actually was ready to vote for McCain in 2000 (back when he truly was a maverick), before someone in the mighty GOP decided it was a better idea to nominate the abysmal failure that is W (please note that he was a failure well before he was elected, as he is now).
I love the concept that the “fire” started with an act passed 30 years ago, someone simmered in the weeds for decades, and then blew into a towering inferno in the past few years.
Edwin – I wonder how you feel about McCain’s proposal to have the Treasury buy up upside down mortgages from those in financial peril and renegotiate a fairer price based on the adjusted, lower value of the homes? I can’t believe that sits well with you.
I wonder if Hans Bader has penned any papers on that recently. If not, I’m sure you’ll find some drivel to post.
BTW, Bader currently is a counsel with CEI – nice unbiased source.
“The Competitive Enterprise Institute is a non-profit public policy organization dedicated to advancing the principles of free enterprise and limited government. We believe that individuals are best helped not by government intervention, but by making their own choices in a free marketplace. Since its founding in 1984, CEI has grown into a $5,000,000 institution with a team of over 30 policy experts and other staff.
We reach out to the public and the media to ensure that our ideas are heard, work with policymakers to ensure that they are implemented, and, when necessary, take our arguments to court. This “full service approach” to public policy helps make us an effective and powerful force for economic freedom.”
Gus –
Correction: my post was supposed to read “somehow simmered in the weeds” not “someone simmered in the weeds”.
Don’t want to confuse you.
But that might not be a concern for someone who assumes so much about “hunan nature”.
Is it too much of an assumption to make that editorial cartoonists draw (read: scribble };p )whatever they consider intersting, important or inspiring in the news of today, rather than say, the weather report? Unless of course it is hurricane season…
A cartooonist using his medium to push his/her agenda on how s/he thinks children should be brought up would be wide open to accusations of meddling outside of their domain, and seems a faintly ridiculous suggestion.
I hesitate to say it, but the activity, or otherwise, of one’s progeny may just be one’s own domain, rather than that of a political scribbler. I certainly know Matt’s cartoons did nothing to get me out of the house when I was a kid. After all, I find it easier to read out of direct sunlight, and not solely for fear of becoming a pile of ash…
[This post has been translated by calmdownandstopswearing.com]
A little cut-and-paste reading for Edwin …
Blame Game Gets Nasty When It Targets the Poor
By Michelle Singletary
The Washington Post
Sunday, October 12, 2008
I was raised by a grandmother who had to assign blame when anything went wrong. For Big Mama, there were never any accidents.
When I got into a car crash while driving her to a doctor’s appointment, she blamed me. Never mind that it was the other driver who failed to yield the right of way.
“You shouldn’t have chosen that street to turn down,” Big Mama argued.
What my grandmother did following that accident is exactly what some politicians, columnists, television hosts and bloggers are doing right now when they blame America’s economic earthquake on the Community Reinvestment Act of 1977, or CRA.
Passed by Congress in an effort to stop discriminatory banking practices against minorities and low- and moderate-income families, CRA compels banks to lend responsibly to customers in local communities where they take deposits.
As we fall deeper into financial trouble, people are looking to assign blame. Critics of CRA say that it has put pressure on banks to make subprime mortgages to poor people and minorities. Therefore, it’s CRA’s fault that we’re experiencing a financial upheaval in our economy.
CRA “legalized the idea that lending institutions could not make loan decisions based solely on criteria such as income and ability to pay the loan back,” a reader wrote to me.
That accusation and others like it are worth about as much as the stock of the failed mortgage companies—the true culprits of this crisis.
CRA specifies that financial institutions cannot be forced to make loans or investments or provide services inconsistent with safe and sound banking practices.
No sir, it wasn’t lending under CRA rules that took down the mortgage industry. It was greedy, reckless banking executives, lending officers and mortgage brokers who were supposed to properly screen borrowers and apply prudent loan underwriting standards. It was lax and inadequate federal and state regulation that allowed exotic and predatory mortgages to be sold to borrowers.
“There is no evidence that the Community Reinvestment Act was responsible for encouraging the subprime lending boom and subsequent housing bust,” wrote Luci Ellis, an economist for the Switzerland-based Bank for International Settlements, last month in her working paper, “The housing meltdown: Why did it happen in the United States?”
In her study, which examined the calamity enveloping global financial markets, Ellis wrote that deposit banks covered by CRA “showed a lesser tendency to write subprime loans than lenders not subject to the act.”
Even if you include subprime loans made by CRA-covered banks and thrifts, the vast majority of the toxic loans stinking up mortgage-backed securities had nothing to do with CRA compliance.
More than half of subprime loans were made by independent mortgage companies not subject to comprehensive federal supervision; another 30 percent of the loans were made by affiliates of banks or thrifts subject to routine examination or supervision, according to congressional testimony given earlier this year by Michael S. Barr, a professor at the University of Michigan Law School.
“The worst and most widespread abuses occurred in the institutions with the least federal oversight,” Barr testified.
Traiger & Hinckley, a New York-based law firm that represents lenders complying with CRA regulation, took a look at whether the law encouraged irresponsible lending.
“CRA banks were significantly less likely than other lenders to make a high-cost loan,” the law firm’s report found. When CRA banks did originate high-cost loans, the average APR (annual percentage rate) was appreciably lower than the average APR on high-cost loans originated by other lenders.
Further, CRA banks were more than twice as likely as other lenders to retain originated loans in their portfolio, said Warren Traiger, a partner at Traiger & Hinckley.
“If more lenders were covered by CRA, the crisis would have been mitigated,” Traiger said in an interview.
The investment banks that purchased, bundled and securitized subprime loans were not covered by CRA, points out Matthew Lee, executive director of Inner City Press, a nonprofit community advocacy group based in the New York borough of the Bronx.
“I see why this argument has gained traction,” Lee said. “You have a law telling banks to lend to poor people. So now people wonder whether CRA is good.”
It’s important to dismiss this atrocious accusation against CRA. Going forward as financial institutions rein in their lending, we cannot go back to a time when low- and moderate-income families, including minorities, had great difficulty getting loans to buy a home. This group of borrowers can make good and profitable mortgage customers when the loans are made wisely and with sound and safe lending criteria.
“I’m offended that the poor are being blamed for this crisis when the exact opposite is true,” Traiger said. “The well-to-do looking to become more well-do-to are to blame—not folks looking to get a mortgage.”