Community Reinvestment Act

[Crotalus]

So many people have their hands dirty with this, that it could take another ten years to accurately assign blame. Like the guy in the video said, I'm tired of hearing ABOUT it. I want to know what we can do to FIX the problem. Maybe one of the first ways to is to make it clear that people will be held responsible for their bad decisions. No more help for stupidity, irresponsibility or greed. Your bank or hedge fund went under because you financed it with shaky, volatile investments - tough. You bought a house worth $500,000 for zero down and hardly a penny to spare to make payments on a 30 year mortgage, just betting on keeping that job until the day you die; but next year, things don't go right - tough. You stretched yourself too thin.

I've payed my own way, only borrowed as much as I KNOW I can pay, even if things were to get bad, and choose to share a tiny rent house with a roommate. I've forced myself to make tough decisions voluntarily, in advance, so that I don't end up with my back to the wall. Any idiot can figure out how to do that too. But I WILL maintain my independence and integrity. With the exception of the minority of people who have been the victim of catastrophic diseases or natural disasters, if you've financed yourself into a hole, by taking bad loans or making bad loans - tough.

My position exactly. People screw up and act like the rest of use are their daddy and should dig in our pockets to bail them out. They find a politician that wants the dead beat vote and here we are.

[Crotalus]

A guy can't default on a loan he's not offered. The cause of the crash in 07 was not just that loans were offered to people that should never have been offered to them in the first place, it was that the value of those loans was misrepresented to investors when the banks bundled those loans with others and sold off pieces of interest in those bundles and insurance on the bundles, both their own bundles and other banks' bundles. In fact, if the value of those underlying loans was accurately represented to investors, the crash wouldn't have happened at all. Loan originators, bundlers, raters and insurers all failed to communicate the risk involved in the investments they were creating and offering for sale to investors and to each other. It's their job to know the risks involved in making a loan and how those risks multiply when bundled with other like loans; they have access to all the actuarial data that lets them know the rates of default and repayment and they have enough money to pay people to do the math to figure up the risks. If the pieces of those bundles had been accurately valued, investors would have been able to buy the pieces of those bundles, or not, and adequately hedge against the risk therein. Because they were lied to about the risk, by the banks, they weren't adequately hedged, and American's IRAs, which were, of course, managed by these self-same banks and which bought up the pieces of the bundles like they were a fat kid and it was a 5 cent candy bucket, lost between a third to half of their average values.

Most of those loans were bundled by Fannie Mae. The people at the top of Fannie Mae were getting rich. Those same people are now working for Obama. Those people need to be in jail. Don't go after the banks that were just doing what the government wanted them to do and threatened them if they didn't.

[U2Bono269]

The banks rigged the economic circumstances? The banks have a crystal ball and can see what the future holds for each person that comes in for a loan? Are you seriously saying this?

I don't think it was rigged, so I agree with you on that one, but I do think banks and other financial institutions made some irresponsible choices with little or no consequences. The ordinary people of America are suffering through significantly more consequences for their decisions than are the institutions that are supposed to be responsible for the economic health of the nation.

[Crotalus]

Smartest man I ever had the privilege of knowing once told me "the masses are asses."

It continues to hold true.

One of the main reasons your statement is true is the present school system. The "bleeding hearts and artists" have been in charge far too long. They are turning out kids whose heads are full of mush. They can no longer think for themselves.

"When I think of all the crap I learned in High School, it's a wonder I can think at all", Paul Simon

[Crotalus]

I do feel a little offended when people make broad remarks that people who are struggling with their mortgage are at fault for taking out huge mortgages they couldn't afford. I resisted the sales pitches of multiple loan officers telling me I could have vast amounts of money and buy a big ol' house of my dreams and bought what I could afford. I made what I thought was a responsible decision, all things considered. Had the economy not bottomed out the following year I really believe I would have been able to make the renovations I wanted to make, sell my condo and be living in a bigger house, one more conducive to raising a toddler in than our 600 square foot box. As of now, we're underwater about $25,000. I don't like it when people suggest that my situation is my fault because of my choices...in retrospect I would have made other choices but at the time they were reasonable and rational.

It's irresponsible for us to say "it's all the borrower's fault!" because it's not always the case.

Now, there's not a day that goes by that I don't wish I could go back in time and rent instead of buying. It has turned out to be the biggest mistake of my life.

My circumstance is exactly the opposite because of the choices I made. I bought a modest house. My wife pressured me for many years to trade up, but I never did. There were several times during the mortgage that we would not have made it if the payments had been larger. Now the house is paid off. We aren't exactly ecstatic about the house, but it's ours and even with the prices today we would make money if we sold. If I had bowed to her pressure we would be renting now. Buying at the limit of your resources is never a good idea no matter how bright your future might seem. A house is a LONG term commitment and no one will ever have good times for 30 years. There will always be setbacks and you should plan for them.

[U2Bono269]

I think our situation would be much better if my wife had a full-time job. We had planned for setbacks, but not to the extent that we had. We both worked for the same company for a while, and about a year after we bought the place we faced a series of paycuts, hour cuts, and benefit reductions that reduced our income almost 40%. Then, after our daughter was born in 2010, the owner of the company laid off my wife. We currently make, combined, about 45% of what we used to make. We weren't prepared for that level of cutback. When I say that I regret buying the condo, I mean that only considering our current situation. Had we not this kind of job loss and income reduction, I believe it would have turned out more-or-less how we envisioned it. If we had rented back then, we'd be able to live in a bigger house, for less money per month. It would be a much more comfortable lifestyle than the one we have now, where it's hard to buy groceries and we can't give our daughter the things we'd like to give her.

[Crotalus]

I don't think it was rigged, so I agree with you on that one, but I do think banks and other financial institutions made some irresponsible choices with little or no consequences. The ordinary people of America are suffering through significantly more consequences for their decisions than are the institutions that are supposed to be responsible for the economic health of the nation.

If the banks made irresponsible choices it is because they were pressured to do so by the government via the Community Reinvestment Act, signed into law by Carter and given teeth by Clinton. The ability to sell the bad loans was made possible by Fannie Mae, so they didn't have to worry about the liability of making bad loans.

[HNSB]

So individuals are capable of making bad choices, but banks are not?

[MinATX]

One of the main reasons your statement is true is the present school system. The "bleeding hearts and artists" have been in charge far too long. They are turning out kids whose heads are full of mush. They can no longer think for themselves.

"When I think of all the crap I learned in High School, it's a wonder I can think at all", Paul Simon

I taught high school for five years. I really didn't see that the problem was with any kind of political agenda that forced teachers to teach a certain perspective, liberal or whatever. Paul Simon went to school a long time ago. Teacher nowadays put more emphasis on teaching kids HOW to think, instead of just WHAT to think. We tried our best to teach them skills, and to think critically, be creative and original, to look at issues from multiple points of view, weigh the options and choose the most logical one, then reevaluate.

The biggest problem was that we didn't get much opportunity to teach like that. We spent most of our time teaching the damn state tests. It's fine to use it to measure progress, but they've make it such high stakes that at most schools, teachers spend most of the spring and part of the fall semester preparing kids for the test. It eats up all the instructional time as well as the funding. It removes the opportunity for real learning from school. The contradictions that teachers face are way too numerous to list here, but I think we've started to educate some of the best teachers ever. However, we've forced those teachers to teach under conditions that undermine their abilities. That goes from the micromanaging regulations that forced us to do literally stacks of paperwork when we could have focused on planning, to the way that our classes were packed with kids who were passed on unprepared, to the parents who didn't give a damn. It's like being on the Titanic, trying to save the ship with just good intentions and a bucket to toss out water.

And of course, you can teach academic skills, life skills ( including vocational classes) critical thought and responsibility until you are blue in the face; but if the parents are idiots or enablers, then the damage has already been done before the kids even get into school.

[Slartibartfast]

Corporations are people and money is free speech. If people can make bad choices, then so can banks.

So individuals are capable of making bad choices, but banks are not?