I think I'M the smartest guy? You're the one who calls himself JR Ewing, an oil mogul. You project the image of a real estate mogul. You're the self-important one.
You've got it all figured out already. I'm sure you're smarter than everyone and every institution that follows, and you'll next say that they're all wrong. I don't have a lot of time, I don't make money when I'm here, so I don't waste much time trying to educate those who already think they know it all, and who probably spend many hours a day trolling many forums for arguments. I'm here to share my experiences and help those who want to learn. It actually started under Carter, and continued. I recall working for a large subprime lender many years ago that was owned by one of the world's largest financial institutions. That lender kept virtually all of its loans, did not do purchase loans, and specialized on those who needed to use home equity to consolidate excessive debt or for other reasons. They had their own scoring system that went from 0-100 that was independent from the FICO. They would frequently adjust the scoring system to either tighten or loosen their own lending standards, and I do know that the system would assign slightly higher scores when applicants would answer the voluntary demographic questions at the end of the application process in certain ways. The loans were approved or declined largely based upon this score by underwriters who were paid by the decision, and who had absolutely no financial interest in whether the loan was approved or declined. I booked more than one loan for clients with FICOs in the 400 range. The large institution that was the parent company of this lender eventually shut this lender down completely back during the crisis, long after I'd left. After leaving that company, I went to work for a broker for a little while, doing mainly purchase loans. From there, I went on to start my own company, which I eventually sold before getting into the securities industry. I put many into loans that were ARMs, "Interest only", etc, often with little or nothing down, because that was the only way a lender would approve them. A FICO a little above 500 and little or nothing more than the money for closing costs was often all that was needed. And I knew that at least some probably would be lucky to be able to make the first payment, and lucky to still be in the home 6 months later. Lenders would tell me that they had to book a certain % of loans to certain people to stay out of trouble with big brother - at least at certain times. http://www.federalreserve.gov/communitydev/cra_about.htm http://spectator.org/articles/42211/true-origins-financial-crisis http://www.globalurban.org/National_Homeownership_Strategy.pdf http://www.investopedia.com/articles/07/baselcapitalaccord.asp http://www.forbes.com/2009/02/13/housing-bubble-subprime-opinions-contributors_0216_peter_wallison_edward_pinto.html Here's a tip - this isn't a socialist board - if you're looking for a board that reinforces your notion that government is the answer to all problems, and free enterprise is the cause of said problems, you won't find much agreement here. And I'm not here to argue with those who know it all - I don't have time.
First URL key takeaway The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound operations. Last 6 words are key.
Those 6 words can be interpreted differently by different people and groups of people. There are no universally accepted permanent standards across the board, etc, etc. Personally, I think that if someone is lending money to someone else, they should be able to use their own judgement. And if someone else buys the loan from the first lender, they should use their own judgement as well. As long as no fraud is committed, it should be a private matter. The government has become too involved in too many things.
2nd URL takeaway You managed to find an article that backs your view. I have one as well but can't post it here because this site tells me I'm too new. How convenient. (Maybe that is why this site doesn't have many democrats.) But I have already summarized the article in my original post. I won't repeat it here.
Key takeaway from URL 3 Of course Clinton wanted to promote homeownership. It has all sorts of positive consequences. People are motivated to work and to keep up their properties. The ways to do this cited in this report include manufacturing smaller, lower cost homes; promoting rehabs; and stimulating technological innovations in home building. Again no mention of unsound financing.
Fourth URL Key Takeaway Nevertheless, Basel I, as the first international instrument assessing the importance of risk in relation to capital, will remain a milestone in the finance and banking history.
URL 5 key takeaway Another self-serving right wing opinion. Even says opinion in the url. Finally, if banks didn't think lending to low income parties was profitable, they wouldn't have done it. Again I make reference to my original post showing why it WAS profitable.
Why the banks tanked The banks ability to sell off the mortgages to the secondary market meant they freed up capital so they could make more than normal loans. But when the secondary mortgage markets woke up to the risky loans contained in high quality tranches they stopped buying and left the banks holding the bag for their risky loans.
