Comments on: Kroszner: CRA & the Mortgage Crisis http://www.ritholtz.com/blog/2008/12/kroszner-cra-the-mortgage-crisis/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Sat, 21 Nov 2009 10:39:57 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: DeDude http://www.ritholtz.com/blog/2008/12/kroszner-cra-the-mortgage-crisis/comment-page-1/#comment-131077 DeDude Fri, 05 Dec 2008 21:39:45 +0000 http://www.ritholtz.com/blog/?p=11795#comment-131077 JW; I have been thinking about this thing with two countries (or parallel universes) myself. I get my opinions from looking at facts. Many of the neo-con-men on the blogs appear to hold their opinions in spite of facts. It seems to me so obvious that if you make decisions that are based on a lie you are likely to fall on your face. So why would anybody discard facts and base decisions on ideology (fantasy)? I understand that there can be issues of reliability of sources but they seem to discard all facts that disagree with their preconceived opinions, regardless of sources. If it doesn’t fit with their ideology they ignore it. If it supports their opinion they will bring it out regardless of how discredited the sources are. It appears that in this parallel universe the approach is that “if it sounds good to me” it must be true, “if it sounds bad to me” it must be wrong. If we ever should have learned anything from the “weapons of mass destruction” blunder of the Bush administration it should be what a disaster such an approach is. I really miss the old Bob Dole style conservatives, at least you could have a reality-based debate with them. JW; I have been thinking about this thing with two countries (or parallel universes) myself. I get my opinions from looking at facts. Many of the neo-con-men on the blogs appear to hold their opinions in spite of facts. It seems to me so obvious that if you make decisions that are based on a lie you are likely to fall on your face. So why would anybody discard facts and base decisions on ideology (fantasy)? I understand that there can be issues of reliability of sources but they seem to discard all facts that disagree with their preconceived opinions, regardless of sources. If it doesn’t fit with their ideology they ignore it. If it supports their opinion they will bring it out regardless of how discredited the sources are. It appears that in this parallel universe the approach is that “if it sounds good to me” it must be true, “if it sounds bad to me” it must be wrong. If we ever should have learned anything from the “weapons of mass destruction” blunder of the Bush administration it should be what a disaster such an approach is. I really miss the old Bob Dole style conservatives, at least you could have a reality-based debate with them.

]]> By: John Pozzi http://www.ritholtz.com/blog/2008/12/kroszner-cra-the-mortgage-crisis/comment-page-1/#comment-130850 John Pozzi Fri, 05 Dec 2008 03:57:12 +0000 http://www.ritholtz.com/blog/?p=11795#comment-130850 The solution is a New World Order - www.grb.net The solution is a New World Order – http://www.grb.net

]]> By: RW http://www.ritholtz.com/blog/2008/12/kroszner-cra-the-mortgage-crisis/comment-page-1/#comment-130827 RW Fri, 05 Dec 2008 02:24:49 +0000 http://www.ritholtz.com/blog/?p=11795#comment-130827 </b> Just closing the bold tag. Just closing the bold tag.

]]> By: RW http://www.ritholtz.com/blog/2008/12/kroszner-cra-the-mortgage-crisis/comment-page-1/#comment-130826 RW Fri, 05 Dec 2008 02:23:59 +0000 http://www.ritholtz.com/blog/?p=11795#comment-130826 Most of those arguing or insinuiating the CRA was in any way responsible for the current debacle appear to come from the Sarah Palin school of debate: Make unfounded assertions with unsupported facts, half-truths or falsehoods then assert a link exists to some other idea that is not really related but might be if a person squints real hard, add a couple ad hominems or other brand of personal aspersion, make it sound like a joke or a bit of good-natured joshing, then toss the word salad and assert anyone who honestly says it's a steaming pile of pandering bowdlerized horse manure must be prejudiced. Folks who get their slop and bull from right-wing talking heads need to at least accept they are being played even if they can not accept where that logically leads. As a general matter the CRA <b>improved</a> the quality of loans (e.g., http://tinyurl.com/3rkftb) and their repayment record is better than that of subprime or, these days, even alt-A generally. Any part loans originated under CRA may have played in the mortgage meltdown is simply dwarfed by the subprime and Alt-A trash from non-CRA lenders that constituted the vast majority of the loan pool(s) entering the securitization machinery; e.g, http://tinyurl.com/3w4fle It is beginning to occur to me that we don't just seem to be becoming two countries ideologically, we appear to be separating into a country willing to take a shot at seeing the world as it is and working with it and a country that just flat can't or won't, a new emergence of know-nothings. I was going to be flip and say that Dumbfuckistan appears to be seceding from the USA but, actually, I'm coming to believe it could be more serious than that ...for a lot of reasons ...okay here's one, a new contract for Intrade perhaps: The length of time before a domestic, non-Muslim (probably Christian fundamentalist) group initiates a terrorist attack against their fellow Americans. JMO Most of those arguing or insinuiating the CRA was in any way responsible for the current debacle appear to come from the Sarah Palin school of debate: Make unfounded assertions with unsupported facts, half-truths or falsehoods then assert a link exists to some other idea that is not really related but might be if a person squints real hard, add a couple ad hominems or other brand of personal aspersion, make it sound like a joke or a bit of good-natured joshing, then toss the word salad and assert anyone who honestly says it’s a steaming pile of pandering bowdlerized horse manure must be prejudiced.

Folks who get their slop and bull from right-wing talking heads need to at least accept they are being played even if they can not accept where that logically leads. As a general matter the CRA improved the quality of loans (e.g., http://tinyurl.com/3rkftb) and their repayment record is better than that of subprime or, these days, even alt-A generally. Any part loans originated under CRA may have played in the mortgage meltdown is simply dwarfed by the subprime and Alt-A trash from non-CRA lenders that constituted the vast majority of the loan pool(s) entering the securitization machinery; e.g, http://tinyurl.com/3w4fle

It is beginning to occur to me that we don’t just seem to be becoming two countries ideologically, we appear to be separating into a country willing to take a shot at seeing the world as it is and working with it and a country that just flat can’t or won’t, a new emergence of know-nothings. I was going to be flip and say that Dumbfuckistan appears to be seceding from the USA but, actually, I’m coming to believe it could be more serious than that …for a lot of reasons …okay here’s one, a new contract for Intrade perhaps: The length of time before a domestic, non-Muslim (probably Christian fundamentalist) group initiates a terrorist attack against their fellow Americans.

JMO

]]> By: DeDude http://www.ritholtz.com/blog/2008/12/kroszner-cra-the-mortgage-crisis/comment-page-1/#comment-130808 DeDude Fri, 05 Dec 2008 00:23:40 +0000 http://www.ritholtz.com/blog/?p=11795#comment-130808 gz; this paper present data to support the claim that CRA did not cause the reckless lending that has brought our financial system to its knees. All you present is unsubstantiated postulates and attack on the messenger. Are we supposed to take you serious? Did you think you had entered a high school debate club? So am I right that you with your “correlation-is-causation” logic is claiming that it is not monority lending and subprime that caused the crisis here. Because, if forced loans to minorities are responsible for subprime and you had neither of those things in Europe, then I guess that either subprime is not responsible for the banking and financial crisis or Europe does not have such a crisis. gz; this paper present data to support the claim that CRA did not cause the reckless lending that has brought our financial system to its knees. All you present is unsubstantiated postulates and attack on the messenger. Are we supposed to take you serious? Did you think you had entered a high school debate club?

So am I right that you with your “correlation-is-causation” logic is claiming that it is not monority lending and subprime that caused the crisis here. Because, if forced loans to minorities are responsible for subprime and you had neither of those things in Europe, then I guess that either subprime is not responsible for the banking and financial crisis or Europe does not have such a crisis.

]]> By: gz http://www.ritholtz.com/blog/2008/12/kroszner-cra-the-mortgage-crisis/comment-page-1/#comment-130798 gz Thu, 04 Dec 2008 23:54:56 +0000 http://www.ritholtz.com/blog/?p=11795#comment-130798 well, the Boston FED was the one claiming racial discrimination in lending since 1994 and the FED has set up racial quotas for mortgages based on CRAso maybe now they that about 60% of subrime endend up to hispanic and black and blew up the global financial system the FEDS feel like ... you know... not admitting that meddling with mortgage standards because of worthy social causes was a good idea it would be nice to know then why is that ONLY IN AMERICA THERE WERE SUBPRIME, I live in Europa and I was in LA for a while and noticed the difference, here we did not have political pressures to lend based on social and racial justice , yes we had verylow rates and lots of greed and high leverage even more than USbanks but not Subrime lending It is really hard to deny that subrime lending which was 80% california, nevada, florida and arizona and pushed for racial policy reasons to immigrants has nothing to do with minority politics, but that is why to read BR, he is the one that performs this difficult act well, the Boston FED was the one claiming racial discrimination in lending since 1994 and the FED has set up racial quotas for mortgages based on CRAso maybe now they that about 60% of subrime endend up to hispanic and black and blew up the global financial system the FEDS feel like … you know… not admitting that meddling with mortgage standards because of worthy social causes was a good idea

it would be nice to know then why is that ONLY IN AMERICA THERE WERE SUBPRIME, I live in Europa and I was in LA for a while and noticed the difference, here we did not have political pressures to lend based on social and racial justice , yes we had verylow rates and lots of greed and high leverage even more than USbanks but not Subrime lending

It is really hard to deny that subrime lending which was 80% california, nevada, florida and arizona and pushed for racial policy reasons to immigrants has nothing to do with minority politics, but that is why to read BR, he is the one that performs this difficult act

]]> By: DeDude http://www.ritholtz.com/blog/2008/12/kroszner-cra-the-mortgage-crisis/comment-page-1/#comment-130713 DeDude Thu, 04 Dec 2008 20:04:02 +0000 http://www.ritholtz.com/blog/?p=11795#comment-130713 Sorry Lugnut (is that Swedish for Wingnut :-), but you seem to be the one with a "predetermined premise". You claim without any supporting evidence that the corruption in south Jersey is more than a "minor possible contributing factor" (and indirectly that the major causes the study documented are only minor contributors). Unless their (or your) data somehow demonstrate something else, how could anybody make a claim about the contribution of corruption to the problem? Sorry Lugnut (is that Swedish for Wingnut :-) , but you seem to be the one with a “predetermined premise”. You claim without any supporting evidence that the corruption in south Jersey is more than a “minor possible contributing factor” (and indirectly that the major causes the study documented are only minor contributors). Unless their (or your) data somehow demonstrate something else, how could anybody make a claim about the contribution of corruption to the problem?

]]> By: Lugnut http://www.ritholtz.com/blog/2008/12/kroszner-cra-the-mortgage-crisis/comment-page-1/#comment-130540 Lugnut Thu, 04 Dec 2008 11:59:01 +0000 http://www.ritholtz.com/blog/?p=11795#comment-130540 I think the study is suspect, at best. I read the case study on Atlantic City, and its enduring, terminal poverty problem. Ask anyone in NJ why it is, and they'll tell you its all about the entrenched corruption of the Democratic controlled political machine in south Jersey that rides herd over the money coming into the city. In the long study, that warrants only a two sentence mentionas a minor possible contributing factor. This wasnt a fact finding study, if thats representative of the other cities studied, its only documenting their predetermined premise for the study. I think the study is suspect, at best. I read the case study on Atlantic City, and its enduring, terminal poverty problem. Ask anyone in NJ why it is, and they’ll tell you its all about the entrenched corruption of the Democratic controlled political machine in south Jersey that rides herd over the money coming into the city. In the long study, that warrants only a two sentence mentionas a minor possible contributing factor. This wasnt a fact finding study, if thats representative of the other cities studied, its only documenting their predetermined premise for the study.

]]> By: DeDude http://www.ritholtz.com/blog/2008/12/kroszner-cra-the-mortgage-crisis/comment-page-1/#comment-130426 DeDude Wed, 03 Dec 2008 23:20:06 +0000 http://www.ritholtz.com/blog/?p=11795#comment-130426 It is not the number of loans but the amount of $ defaulted that should be counted, if you are looking for financial/economic impact. It costs a lot more for the banks if someone defaults on a 400K loan in a nice suburb than when someone defaults on a 40K loan for a shack in the slums. However, you have to compare the same vintage of CRA vs. non-CRA loans to get a fair comparison. The economy (and default rates) cycles up and down so it would be hard to make a meaningfull comparison of before and after CRA loans. Anyway it would be pretty much impossible to find comparable sub-prime 125% LTV, no doc, no payment needed loans given in the period before CRA. Brett; Bush didn’t cause a lot of this by his actions, its his inactions that are to blame. It is his job to keep an eye on things and stop problems before they develop into something serious. Greenspan at least had the balls to admit that he was wrong when he believed that the CEO who (in theory) had access to all the information didn’t need oversight because they would never put their companies into such huge risk. All I have heard from the other neo-con-men are excuses about how it is actually someone elses (gay, democrat, etc.) fault or sticking the head in the sand with elaborate explanations of how the problem was too much regulation. I agree that if all consumers and CEO’s had been smart, responsible and capable of predicting the future by other means than linear extrapolation of the past, then this would not have happened. However, unless you want to throw people in jail for being gullible and wanting more than they have, the only way to prevent this type of disaster from happening again is to demand that government pick up the signs early and prevent the problems from getting out of hand. We don’t allow drug companies to go directly to cancer patients and peddle whatever poisonous snake oil they want without any scientific evidence that it works. Why should we allowing financial companies to enrich themselves by ruining gullible peoples life with lies and distortions? It is not the number of loans but the amount of $ defaulted that should be counted, if you are looking for financial/economic impact. It costs a lot more for the banks if someone defaults on a 400K loan in a nice suburb than when someone defaults on a 40K loan for a shack in the slums. However, you have to compare the same vintage of CRA vs. non-CRA loans to get a fair comparison. The economy (and default rates) cycles up and down so it would be hard to make a meaningfull comparison of before and after CRA loans. Anyway it would be pretty much impossible to find comparable sub-prime 125% LTV, no doc, no payment needed loans given in the period before CRA.

Brett; Bush didn’t cause a lot of this by his actions, its his inactions that are to blame. It is his job to keep an eye on things and stop problems before they develop into something serious. Greenspan at least had the balls to admit that he was wrong when he believed that the CEO who (in theory) had access to all the information didn’t need oversight because they would never put their companies into such huge risk. All I have heard from the other neo-con-men are excuses about how it is actually someone elses (gay, democrat, etc.) fault or sticking the head in the sand with elaborate explanations of how the problem was too much regulation. I agree that if all consumers and CEO’s had been smart, responsible and capable of predicting the future by other means than linear extrapolation of the past, then this would not have happened. However, unless you want to throw people in jail for being gullible and wanting more than they have, the only way to prevent this type of disaster from happening again is to demand that government pick up the signs early and prevent the problems from getting out of hand. We don’t allow drug companies to go directly to cancer patients and peddle whatever poisonous snake oil they want without any scientific evidence that it works. Why should we allowing financial companies to enrich themselves by ruining gullible peoples life with lies and distortions?

]]> By: Brett Tibbitts http://www.ritholtz.com/blog/2008/12/kroszner-cra-the-mortgage-crisis/comment-page-1/#comment-130415 Brett Tibbitts Wed, 03 Dec 2008 22:30:48 +0000 http://www.ritholtz.com/blog/?p=11795#comment-130415 Ethel-to-Lilly: Never said it was ALL Clinton's fault.....never even intimated such an idea. My point is that what we are dealing with are systemic issues that have been years in the making. George Bush certainly made more than his fair share of mistakes. And perhaps, if he hadn't made all of them, the day of reckoning would have been delayed. But this county has been on the wrong track WHEN IT COMES TO DEBT for decades and decades, not just the last eight years. There's a lot of blame to go around. All I am saying is that if this country wants to take the tack that ALL of our current problems are the result of George Bush and his "laissez faire attitude", we are in for a world of trouble, IMHO. George Bush didn't whisper in the ear of the CEOs of Lehman, Bank of America, Goldman, Merrill Lynch, Fannie, Freddie, Citi, etc., etc. and say "make those loans". Gee, this is America, and I think each of them made the stupid choice to make those loans. George Bush didn't whishper in the ear of my next door neighbor to buy an obviously over valued house and then get a HELOC to buy a boat. Gee, this is America, and I think my next door neighbor made the decision to get in over his head based upon his own entitlement mentality to live beyond his means. Yes, George Bush, clearly tried to take credit for things when the shell game was still going with his ridiculous "homeownership for all" statements. But he didn't CAUSE the WHOLE thing. The fault for the financial problems this country currently faces lays miles deep. Ethel-to-Lilly:

Never said it was ALL Clinton’s fault…..never even intimated such an idea.

My point is that what we are dealing with are systemic issues that have been years in the making.

George Bush certainly made more than his fair share of mistakes. And perhaps, if he hadn’t made all of them, the day of reckoning would have been delayed.

But this county has been on the wrong track WHEN IT COMES TO DEBT for decades and decades, not just the last eight years.

There’s a lot of blame to go around. All I am saying is that if this country wants to take the tack that ALL of our current problems are the result of George Bush and his “laissez faire attitude”, we are in for a world of trouble, IMHO.

George Bush didn’t whisper in the ear of the CEOs of Lehman, Bank of America, Goldman, Merrill Lynch, Fannie, Freddie, Citi, etc., etc. and say “make those loans”. Gee, this is America, and I think each of them made the stupid choice to make those loans.

George Bush didn’t whishper in the ear of my next door neighbor to buy an obviously over valued house and then get a HELOC to buy a boat. Gee, this is America, and I think my next door neighbor made the decision to get in over his head based upon his own entitlement mentality to live beyond his means.

Yes, George Bush, clearly tried to take credit for things when the shell game was still going with his ridiculous “homeownership for all” statements. But he didn’t CAUSE the WHOLE thing.

The fault for the financial problems this country currently faces lays miles deep.

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