On Mon, 17 Nov 2008 21:06:04 -0700, Mark & Juanita wrote:

Reader's Digest Version:
1) The update to the CRA *did* force banks to make loans to people who they
knew would not be able to pay them back. The penalty would be inability to
merge with other banks, open other branches, and have their CRA rating
degraded. This act was using the force of law to coerce banks into making
loans that they otherwise would not have made.

The URL you gave got me a 404. I even went to the home page and tried
their search - no joy. But if what you quote and they said is true, then
that's certainly part of the cause - I stand corrected.

But the lack of regulation for those exotic derivatives also bears much of
the blame. Gramm had a lot to do with that. And don't forget that up to
30% of the mortgages in default are from "flippers" who got low or no down
loans and simply walked away when they got underwater.

I suspect economists will be arguing for some times about the various
reasons for the meltdown and which of them bears what percent of the blame.

I did do a google on the CRA and read a few of the articles. One which
I'd like to call to your attention is:

http://mediamatters.org/items/200810100022

Here's a couple of quotes:

"A study released earlier this year by a law firm specializing in CRA
compliance estimated that in the 15 most populous metropolitan areas, 84.3
percent of subprime loans in 2006 were made by financial institutions not
governed by the CRA."

"More than half of subprime loans were made by independent mortgage
companies not subject to comprehensive federal supervision; another 30
percent of such originations were made by affiliates of banks or thrifts,
which are not subject to routine examination or supervision, and the
remaining 20 percent were made by banks and thrifts."

Obviously neither you or I have the time to fully investigate either your
references or mine. At some point we have to estimate the weight of the
testimonies and the credibility of the testifiers. So far the weight
and credibility seems to me to be on the side of those who claim greed and
lack of regulation were the primary culprits.