On Sat, 11 Oct 2008 17:08:45 -0700 (PDT), Charlie Self
wrote:

It's not so much a revelation as bull****. The problems with subprime
were not caused by the borrowers aimed at by Carter, but by lenders
who over-valued houses and allowed people who obviously didn't have
the means to buy immense houses. Almost wrote homes, but damned few of
those places are homes or ever will be. The original act was aimed at
allowing poorer borrowers a shot at the market. What happened was that
lenders saw far more money in letting better off, but not better off
enough, borrowers to grab mortgages beyond their means. Short term
profits were immense. Now, you and I get to pay for that.

It really has little to do with political parties. There is sufficient
shame and blame to go around.


Yes. The original intent of the Carter era legislation was an
honorable one. It was aimed directly at the process of "Redlining"
that was prevalent at the time and which excluded housing purchases in
depressed areas without regard to the borrower's qualifications.

According to the Federal Reserve website the lending institutions were
specifically precluded from making unsafe loans:

"The Community Reinvestment Act is intended to encourage depository
institutions to help meet the credit needs of the communities in which
they operate, including low- and moderate-income neighborhoods,
consistent with safe and sound operations. It was enacted by the
Congress in 1977 (12 U.S.C. 2901) and is implemented by Regulation BB
(12 CFR 228). The regulation was substantially revised in May 1995,
and was most recently amended in August 2005.
Evaluation of CRA Performance
The CRA requires that each depository institution's record in helping
meet the credit needs of its entire community be evaluated
periodically. That record is taken into account in considering an
institution's application for deposit facilities.

Neither the CRA nor its implementing regulation gives specific
criteria for rating the performance of depository institutions.
Rather, the law indicates that the evaluation process should
accommodate an institution's individual circumstances. Nor does the
law require institutions to make high-risk loans that jeopardize their
safety. To the contrary, the law makes it clear that an institution's
CRA activities should be undertaken in a safe and sound manner."

http://www.federalreserve.gov/dcca/cra/


It is typical of the current adversarial environment that reality is
not merely ignored but is vociferously denied.


tom watson