SkyDekker 1,465
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rushmc 23
QuoteQuoteDeerviatives were used by these intitutions to try and cover the extra risk they were in essance being forced (by gov threat) to take on
No, derivatives were used to increase the profit being made from them. Those derivatives made bundled subprime mortgages an "investment" (read gambling) vehicle. It didn't matter what the terms of the mortgage were.
Hence, without the derivative market and the lax lending rules, this simply woudl not have happened. From the last article you linked to:QuoteOf course it wasn’t the CRA that caused everything. The CRA was a factor in lowering lending standards. This was a necessary, although not sufficient, cause for the mortgage mess.
CRA didn't cause the crash. It was what created the environement that spawned the derivatives. Those derivatives drove the demand for subprime mortgages. Hence the incredible influx of all financial institutions, old and new, into the subprime market.
The CRA created that environment because there was not enough regulation in the "exotic" mortgage market or the derivative market.
One of the reasons Canada faired THAT much better than the US is the presence of that regulation.
Ok, now we are into opinion
We disagree here
The only thing we do agree on is the gov created the enviornment
Bush tried to reign this in but Frank and others would not let him, remember? (although I think it was too late by then anyway)
"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln
SkyDekker 1,465
QuoteOk, now we are into opinion
We disagree here
Well, it is not really opinion. If the CRA forced loans that were not profitable, there is no way that financial institutions not governed by the CRA would have entered that market.
Stating that government forced loans created the crash, or that the CRA forced the crash is simply not supportable by any evidence.
rushmc 23
QuoteQuoteOk, now we are into opinion
We disagree here
Well, it is not really opinion. If the CRA forced loans that were not profitable, there is no way that financial institutions not governed by the CRA would have entered that market.
Stating that government forced loans created the crash, or that the CRA forced the crash is simply not supportable by any evidence.
Not supported by your beliefs maybe
There is plenty of evidence to support my opinion
Again
They used these tools to stay profitable
They needed to mitigate the risk being forced on them
And there are many who agree
We most likely will not agree
And this is ok
"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln
winsor 236
QuoteQuoteI NEVER stated that it did not happen ever.
But YOU imply this was a rampt issue
That is just silly on your part
The studies that formed the basis of the CRA would suggest otherwise. They showed pretty systematic behaviour. White couples got better terms than non-white couples.
I am reminded of a book from the '60s along the lines of "How to Lie with Statistics."
I have more than a sneaking suspicion that, if you did not identify who was of European, Eskimo, sub-Saharan African or Asian extraction, any anomalies in the loan process would likely be the opposite of those you might expect.
Terms are generally based on an individual's track record, and I know few bankers who would say "Well, it does not look like you qualify, given the number of creditors chasing you and liens you have outstanding. However, you have the kind of ethnicity that convinces me that we should give you money, so I am going to approve the loan at the best rate we can manage."
It's okay to say that one ethnic group or another is filling up the ranks of engineering grad schools without being charged with racism, but to say another ethnic/socioeconomic group tends to do very badly in the same curriculum, regardless of the advantage you might build into the system, the charge flies immediately "You be racist!"
I like the audition process at Juliard, where the committee is on the other side of the screen from the performer being evaluated. There is no way to tell if the person looks like Scarlett Johansson or Whoopie Goldberg, Magic Johnson or Danny DeVito.
All population groups are not equal. White folk from Westchester, NY are not interchangeable with white folk from Throgs Neck, the Bronx, and black folk from Manhassett, NY are not interchangeable with black folk from Harlem, NY. Quite why there exist these differences would fuel rather a number of PhD dissertations, but there is no particular value judgment in noting that such differences exist.
Anyone who makes a living in Marketing and is not aware of these differences is likely to go broke. There are places where you could not give anchovies away, and others where they would not feed chitterlings to their dogs.
Much of the perceived "racism" in lending was Government-enforced, and of the "reverse" variety. I knew people whose job it was to arrange loans (with the best of intentions) to people of fashionable ethnicities who would not otherwise qualify. The terms reflected the level of qualification, and typically turned out to be a losing deal anyway.
So the claim that, statistically speaking, one group got a worse deal than another may be quite accurate. On a case by case basis, however, it will likely turn out that the apparently oppressed group got a better deal than would have been the case had they been of the seemingly dominant ethnicity.
It would be nice if things were ever as simple as they were made to appear by people with agenda, if not conflict of interest.
BSBD,
Winsor
QuoteSo the claim that, statistically speaking, one group got a worse deal than another may be quite accurate. On a case by case basis, however, it will likely turn out that the apparently oppressed group got a better deal than would have been the case had they been of the seemingly dominant ethnicity.
nope - the evidence is ample that racism was a major factor in whether or not you got a loan. you can deny the evidence but why would you want to do that? mmmmm....
stay away from moving propellers - they bite
blue skies from thai sky adventures
good solid response-provoking keyboarding
blue skies from thai sky adventures
good solid response-provoking keyboarding
rushmc 23
QuoteQuoteSo the claim that, statistically speaking, one group got a worse deal than another may be quite accurate. On a case by case basis, however, it will likely turn out that the apparently oppressed group got a better deal than would have been the case had they been of the seemingly dominant ethnicity.
nope - the evidence is ample that racism was a major factor in whether or not you got a loan. you can deny the evidence but why would you want to do that? mmmmm....
And again the (implied) race card
You really are limited in your debate
Popcorn anyone?
"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln
rehmwa 2
Quoteracism was a major factor in whether or not you got a loan...
(I suspect you are deliberately confusing a correlation into a causal accusation in the majority - and thus generalizing a finding makes it even harder to fix those specific instances you "claim" needed fixing to just push a political bias)
However, even with the premise - in what world is legislating that really bad loans must be made to all and eventually destroying the economy
a better solution than
directly going after specific banks that showed discrimination (of any kind) in their loan approval process and fixing that instead?
The only 'discrimination' that should occur in the loan process is that those able to make the payment should get preference over those that clearly can't.
...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants
rushmc 23
This is a bit off the thread topic but I do feel it is related
Do you know, the fasted growing field that is drawing venture capital today?
Compliance software
Programs that help business keep up with gov regulations
Do you know, the fasted growing field that is drawing venture capital today?
Compliance software
Programs that help business keep up with gov regulations
"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln
SkyDekker 1,465
Quotein what world is legislating that really bad loans must be made to all and eventually destroying the economy
Which legislation stated they had to make bad loans? The CRA? If the loans were so bad, why did so many institutions not governed by the CRA write these bad loans?
SkyDekker 1,465
QuoteMuch of the perceived "racism" in lending was Government-enforced,
Absolutely. But, I don't think the racism was perceived.
The FHA actively encouraged racial discrimination. It employed restrictive covenants to insure against "inharmoneous racial groups". Under FHA policy land next to that owned by (visual) minorities was classed as undesirable.
HOLC bought homes in white neighbourhoods could not be sold to blacks. HOLC loans could only be made if racial segregation was maintained.
Hard to build wealth if you are prevented from buying quality real estate.
DougH 270
QuoteAbsolutely true, not everyone should own a home. Not everyone can even afford to live on their own -- I think there should be more boarding houses out there.
But my question goes to why there might have been some "interference" into loan decisions in the first place. A post-runner to the "no Irish need apply" mentality that still exists in some places. Like those where employees are expected to be like everyone else, including liking to listen to Rush Limbaugh, be comfortable with NASCAR, like rap music, have tits, or anything else like that.
As long as there are qualitative decisions, there will be discrimination. If it's too strong against any single group across an industry, then either the industry needs to consider its guidelines, or the government maybe ought to encourage it to reconsider them.
Guidelines for loans aren't entirely financial, are they. I don't think that people who can't afford houses should buy them. I also don't think that people who can't afford bigger houses should buy them, nor should people who can refinance to the entire value of their house.
Wendy P.
It had nothing to do with discrimination, it was the opposite. The government pushed affirmative action for home loans. The crappier the borrower the better.
It was social engineering through lowering of business standards.
"The restraining order says you're only allowed to touch me in freefall"
=P
=P
No, derivatives were used to increase the profit being made from them. Those derivatives made bundled subprime mortgages an "investment" (read gambling) vehicle. It didn't matter what the terms of the mortgage were.
Hence, without the derivative market and the lax lending rules, this simply woudl not have happened. From the last article you linked to:
CRA didn't cause the crash. It was what created the environement that spawned the derivatives. Those derivatives drove the demand for subprime mortgages. Hence the incredible influx of all financial institutions, old and new, into the subprime market.
The CRA created that environment because there was not enough regulation in the "exotic" mortgage market or the derivative market.
One of the reasons Canada faired THAT much better than the US is the presence of that regulation.
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