@XAVIERSMAMA wrote:
@Anonymous wrote:LOL, well since I accepted the lower offer and will be closing Friday. I can turn this into a political discussion..
I am with you on this being partially the fault of the consumer. But I think you are failing to go back to the root of the issue.. If it wasn't for politician trying to make everyone equal (in terms of spending) this would not have turned into a financial mess.. Think Community Reinvestment Act, that was the beginning of this bubble, it was just piled on by each politician who came in contact with it since. Same can be said of the credit card industry, started out you had to show proof you could pay, but with high interest, then politician got involved and made getting credit easy, so those who want it now jumped all over that deal. Used to be when you bought a house or any major purchase you had to show you could afford it with down payment money, a stable job, good credit history, etc. Then suddenly a politician decided that even those who couldn't afford a house should be afforded the opportunity to buy one, even with no job..Sounds good until it comes time to pay for it. So just like not leaving the keys in your car to prevent a good kid from going bad, our politicians should never have allowed a law to make it so easy to buy anything on credit.. People will take advantage of a good thing if given the opportunity, for some it’s not having any restraint..
Again, I'm with you on the fact that consumers went to far and were irresponsible on their own. But let’s not forget that if the politicians didn't see a way to get votes the rules wouldn't have changed to allow it. I don’t care who you vote for, but there is a lot of video proof of people who only vote because they think the government is going to take care of them. Have you noticed 99% of political speeches are always about what they are going to do to make your life better? They talk about people taking responsibility but rarely come through with anything that would force it. It’s not the governments job to make your life better, It’s a personal thing..
Lesson learned now I'm licking my wounds and going back to work.
Dave
While I am no fan of politicians and I recognize that we as consumers played a major part in this mess, the community reinvestment act was meant to encourge financial institutions to invest in the communities that they do business in. No one made these banks offer ARM, no doc and interest only loans. They could have offered 40 year mortgages for low income borrowers to make them more affordable or teamed up with local housing authorities to offer a small percentage of their loan business to help meet the acts requirements. Unfortunately these options were not as profitable as the products they used instead. The CRA had good intentions but when you let big business and big banks implement it, good intentions don't stand a chance against profits and shareholders. My two cents
LOL,
Only problem with CRA and the banks is the banks are not in business to lose money, but the CRA was in business to give it away..
The politicians are the ones who wrote the bill, the banks were working within the framework of the bill, not to mention everyone was making money off each other through 401's and other investment vehicles. Banks were not the "Mr. Potter" of It's a Wonderful Life" people are attempting to make of them. Seems they were influenced by politicians to change their loan practices if they wanted to stay in business or expand..Shoot the CRA provided an almost risk free environment to make money, look how the money was passed out recently as they are to big to fail. While the politicians that stood and said the Freddy and Fanny were not in any trouble, are still in charge of the commitee's overwatching them.. Yep, I believe it was all the banks fault.
Here is a little something to consider (taken from an article in Invester Business Daily)
"Age-old standards of banking prudence got thrown out the window. In their place came harsh new regulations requiring banks not only to lend to uncreditworthy borrowers, but to do so on the basis of race.
These well-intended rules were supercharged in the early 1990s by President Clinton. Despite warnings from GOP members of Congress in 1992, Clinton pushed extensive changes to the rules requiring lenders to make questionable loans. [...]
Failure to comply meant your bank might not be allowed to expand lending, add new branches or merge with other companies. Banks were given a so-called "CRA rating" that graded how diverse their lending portfolio was. [...]
In the name of diversity, banks began making huge numbers of loans that they previously would not have. They opened branches in poor areas to lift their CRA ratings.
Meanwhile, Congress gave Fannie and Freddie the go-ahead to finance it all by buying loans from banks, then repackaging and securitizing them for resale on the open market.
That's how the contagion began."
As much as I wish every human has a roof over their head, It is not governments job to provide for it. That is what being a good neighbor and community organizations are for..
As to the last sentence in your reply.... "quote" The road to hell is paved with good intentions.
We are currently traveling down that road, just hope there is a detour someplace soon.
Dave
Here is an excerpt from the CRA from the Federal Reserve website
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.
Again, consumers are not innocent in this, but no where does it say in the CRA that banks have to make risky loans based off of race. They could have made the required number of loans based off of less risky mortgages, in fact a lot of regional banks and small credit unions did just that and have for the most part completely avoided the sub prime debacle. They didn't make record breaking profits 5-8 years ago, but they aren't in need of a bailout now either. It's not about the government "providing a roof over everyone's head". There are millions of low income families in this country who will never be able to save 20% for a down payment because their current housing costs are 50% or more of their net income. If someone can afford to pay $900 in rent every month and never be late, then they can most likely afford a $500-600 house payment. Homeownership can be a major cornerstone to wealth building and retirement planning. Low income families should not be left out just because they are low income. The CRA never said give to non creditworthy borrowers but take individual circumstances into consideration and come up with loan product that would address those needs. I don't see anything wrong with requiring institutions that rely heavily on tax incentives to invest in underserved areas. The problem is the "what's in it for me" syndrome that too many in this country have adopted. My two cents
Chief3 wrote:
@XAVIERSMAMA wrote:
@Anonymous wrote:LOL, well since I accepted the lower offer and will be closing Friday. I can turn this into a political discussion..
I am with you on this being partially the fault of the consumer. But I think you are failing to go back to the root of the issue.. If it wasn't for politician trying to make everyone equal (in terms of spending) this would not have turned into a financial mess.. Think Community Reinvestment Act, that was the beginning of this bubble, it was just piled on by each politician who came in contact with it since. Same can be said of the credit card industry, started out you had to show proof you could pay, but with high interest, then politician got involved and made getting credit easy, so those who want it now jumped all over that deal. Used to be when you bought a house or any major purchase you had to show you could afford it with down payment money, a stable job, good credit history, etc. Then suddenly a politician decided that even those who couldn't afford a house should be afforded the opportunity to buy one, even with no job..Sounds good until it comes time to pay for it. So just like not leaving the keys in your car to prevent a good kid from going bad, our politicians should never have allowed a law to make it so easy to buy anything on credit.. People will take advantage of a good thing if given the opportunity, for some it’s not having any restraint..
Again, I'm with you on the fact that consumers went to far and were irresponsible on their own. But let’s not forget that if the politicians didn't see a way to get votes the rules wouldn't have changed to allow it. I don’t care who you vote for, but there is a lot of video proof of people who only vote because they think the government is going to take care of them. Have you noticed 99% of political speeches are always about what they are going to do to make your life better? They talk about people taking responsibility but rarely come through with anything that would force it. It’s not the governments job to make your life better, It’s a personal thing..
Lesson learned now I'm licking my wounds and going back to work.
Dave
While I am no fan of politicians and I recognize that we as consumers played a major part in this mess, the community reinvestment act was meant to encourge financial institutions to invest in the communities that they do business in. No one made these banks offer ARM, no doc and interest only loans. They could have offered 40 year mortgages for low income borrowers to make them more affordable or teamed up with local housing authorities to offer a small percentage of their loan business to help meet the acts requirements. Unfortunately these options were not as profitable as the products they used instead. The CRA had good intentions but when you let big business and big banks implement it, good intentions don't stand a chance against profits and shareholders. My two cents
LOL,
Only problem with CRA and the banks is the banks are not in business to lose money, but the CRA was in business to give it away..
The politicians are the ones who wrote the bill, the banks were working within the framework of the bill, not to mention everyone was making money off each other through 401's and other investment vehicles. Banks were not the "Mr. Potter" of It's a Wonderful Life" people are attempting to make of them. Seems they were influenced by politicians to change their loan practices if they wanted to stay in business or expand..Shoot the CRA provided an almost risk free environment to make money, look how the money was passed out recently as they are to big to fail. While the politicians that stood and said the Freddy and Fanny were not in any trouble, are still in charge of the commitee's overwatching them.. Yep, I believe it was all the banks fault.
Here is a little something to consider (taken from an article in Invester Business Daily)
"Age-old standards of banking prudence got thrown out the window. In their place came harsh new regulations requiring banks not only to lend to uncreditworthy borrowers, but to do so on the basis of race.
These well-intended rules were supercharged in the early 1990s by President Clinton. Despite warnings from GOP members of Congress in 1992, Clinton pushed extensive changes to the rules requiring lenders to make questionable loans. [...]
Failure to comply meant your bank might not be allowed to expand lending, add new branches or merge with other companies. Banks were given a so-called "CRA rating" that graded how diverse their lending portfolio was. [...]
In the name of diversity, banks began making huge numbers of loans that they previously would not have. They opened branches in poor areas to lift their CRA ratings.
Meanwhile, Congress gave Fannie and Freddie the go-ahead to finance it all by buying loans from banks, then repackaging and securitizing them for resale on the open market.
That's how the contagion began."
As much as I wish every human has a roof over their head, It is not governments job to provide for it. That is what being a good neighbor and community organizations are for..
As to the last sentence in your reply.... "quote" The road to hell is paved with good intentions.
We are currently traveling down that road, just hope there is a detour someplace soon.
Dave
Welcome to the forums!
Forum rules require you to post a link to support your quote, otherwise we have copyright issues. If you can, please post the link from Investor Business Daily. If you cannot, I will have to remove your quotes. Thank you for your understanding.
--fused, myfico moderator
XAVIERSMAMA wrote:
Here is an excerpt from the CRA from the Federal Reserve website
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.
Again, consumers are not innocent in this, but no where does it say in the CRA that banks have to make risky loans based off of race. They could have made the required number of loans based off of less risky mortgages, in fact a lot of regional banks and small credit unions did just that and have for the most part completely avoided the sub prime debacle. They didn't make record breaking profits 5-8 years ago, but they aren't in need of a bailout now either. It's not about the government "providing a roof over everyone's head". There are millions of low income families in this country who will never be able to save 20% for a down payment because their current housing costs are 50% or more of their net income. If someone can afford to pay $900 in rent every month and never be late, then they can most likely afford a $500-600 house payment. Homeownership can be a major cornerstone to wealth building and retirement planning. Low income families should not be left out just because they are low income. The CRA never said give to non creditworthy borrowers but take individual circumstances into consideration and come up with loan product that would address those needs. I don't see anything wrong with requiring institutions that rely heavily on tax incentives to invest in underserved areas. The problem is the "what's in it for me" syndrome that too many in this country have adopted. My two cents
Forum rules require you to post a link to support your quote, otherwise we have copyright issues. If you can, please post the link from the Federal Reserve Bank website. If you cannot, I will have to remove your quote. Thank you for your understanding.
--fused, myfico moderator
Here is the link.. http://newsbusters.org/blogs/noel-sheppard/2008/09/20/ibd-carter-more-blame-financial-crisis-bush-or...
Now I know the rules!!!
The link to prove my point about what was said is http://www.federalreserve.gov/dcca/cra/
Dave
