Why are Freepers and Bigots touting the CRA for the markets demise.
From what I can see it is merely a “Rating System” which has no real teeth.
The 1978 CRA regulations focused CRA examinations on factors related to the process used by institutions to determine the credit needs of their community and to their responses to those needs. The evaluation of an institution's performance was based on the application of twelve assessment factors, including the ascertainment of community credit needs, marketing and the types of credit offered, the geographic distribution of loans, the record of opening and closing branches and providing services, participation in local community development projects, and the financial and legal capability of the institution. To avoid allocating credit, and to allow for creativity by institutions in meeting the varying credit needs of their localities,
these regulations did not require specific products to be offered or attempt to prescribe any particular required level of lending. Further, all covered institutions were subject to the same set of rules and assessment factors, without differentiating based on size or location.
http://www.federalreserve.gov/newsevents/testimony/braunstein20080213a.htm But then we have 1 of our favorite Bigots touting the CRA was the demise of Wall St. When I actually read through his babble about those “Undeserving Minorities” who need a loan to buy a house. The only “Real Teeth” of the CRA Law he cites is
if a bank wants to make virtually
any change in its business operations — merging, opening up a new branch, getting into a new line of business — it must first prove to regulators that it has made "enough" loans to the government's preferred borrowers. The (partially) tax-funded "community groups" like
ACORN (Association of Community Organizations for Reform Now) can file petitions with regulators that stop the bank's activities in their tracks, perhaps defeating them altogether. The banks routinely buy off ACORN and other "community groups" by giving them millions of dollars as well as promising to make even more dubious loans.
http://mises.org/story/2963 Does anyone here think these “Petitions” carry any weight at all with the regulators
BTW: The Bigot of the Day Award goes to...