Do you honestly think that a few poor people in the US caused a Global Financial Crisis that took down dozens of banks and sent most of the Western World into a recession?
I would encourage you to read 'The Big Lie' by Barry Ritholtz that completely debunks this nonsense.[1] He even offered a bet of $100,000 to debate anyone in front of a 'jury' about the role of CRA in the crisis (unsurprisingly, he had no takers).[2]
I'll just point out some facts that address your most incorrect assertions, but just about everything you wrote is incorrect or extremely misleading.
This encouraged banking institutions to increase the number of
sub-prime mortgages with the stated goal of increasing home
ownership among lower income communities.
CRA loans looked nothing like sub-prime loans.[3] In 2004, about 3.5% of CRA loans defaulted, while about 18% of subprime loans did, and 25% of broker-placed subprimes did. By 2006, 15% of CRA loans were defaulting, but almost 50% of subprimes were and 40% of broker-placed subprimes were.[4]
Additionally, many subprime defaults originated in prime loans, up to 60% in Massachusetts![5] So these people qualified for Prime mortgages, and then refinanced with Subprimes. They couldn't possibly be CRA loans.
Fannie Mae and Freddie Mac (USG-sponsored entities) to devote
a percentage of their annual budget to securitizing [..]
these sub-prime mortgages.
Fannie and Freddie did securitize many mortgages, yet during the housing bubble, their market share was cut in half by all the private banks running wild with MBS products.[6] They also had proper due diligence and lending standards, so their 'high-risk' loan performance was almost 3x better than private lender subprime performance.[7]
Also, if Fannie and Freddie were at fault, then why did the commercial real estate market, with absolutely no government support, have a much more severe price drop (45% compared to 30% [8])?
Or you could take it from the Financial Crisis Inquiry Commission[9]:
The study found that only 6% of such higher-cost loans
were made to low or moderate-income borrowers or in low
or moderate-income neighborhoods covered by the CRA. The
other 94% of higher-cost loans either were made by CRA-
covered institutions that did not receive CRA credit for
these loans or were made by lenders not covered by the CRA.
I think that's enough for now.
I would love to hear how the Savings and Loan crisis was the fault of the FDIC though, that promises to be entertaining. Especially when the guy who literally wrote the book on the crisis noted that[10];
Deposit insurance was not essential to S&L control frauds.
He then goes on to demonstrate an argument regarding how CRA loans had virtually nothing to do with the crisis. How on earth do you feel he isn't addressing an argument you made?
What the?? Your argument is thoroughly debunked and THIS is your response? When your wife calls you a bitch do you also thank her for the quasi-relevant information? Because that's basically what you just did.
I would encourage you to read 'The Big Lie' by Barry Ritholtz that completely debunks this nonsense.[1] He even offered a bet of $100,000 to debate anyone in front of a 'jury' about the role of CRA in the crisis (unsurprisingly, he had no takers).[2]
I'll just point out some facts that address your most incorrect assertions, but just about everything you wrote is incorrect or extremely misleading.
CRA loans looked nothing like sub-prime loans.[3] In 2004, about 3.5% of CRA loans defaulted, while about 18% of subprime loans did, and 25% of broker-placed subprimes did. By 2006, 15% of CRA loans were defaulting, but almost 50% of subprimes were and 40% of broker-placed subprimes were.[4]Additionally, many subprime defaults originated in prime loans, up to 60% in Massachusetts![5] So these people qualified for Prime mortgages, and then refinanced with Subprimes. They couldn't possibly be CRA loans.
Fannie and Freddie did securitize many mortgages, yet during the housing bubble, their market share was cut in half by all the private banks running wild with MBS products.[6] They also had proper due diligence and lending standards, so their 'high-risk' loan performance was almost 3x better than private lender subprime performance.[7]Also, if Fannie and Freddie were at fault, then why did the commercial real estate market, with absolutely no government support, have a much more severe price drop (45% compared to 30% [8])?
Or you could take it from the Financial Crisis Inquiry Commission[9]:
I think that's enough for now.I would love to hear how the Savings and Loan crisis was the fault of the FDIC though, that promises to be entertaining. Especially when the guy who literally wrote the book on the crisis noted that[10];
[1] http://www.washingtonpost.com/business/what-caused-the-finan...[2] http://www.ritholtz.com/blog/2009/06/100000-cra-challenge/
[3] http://rortybomb.wordpress.com/2009/06/29/what-was-a-subprim...
[4] http://imgur.com/EPY5PyF
[5] http://www.bostonfed.org/economic/wp/wp2007/wp0715.pdf (page 4-5)
[6] http://i.imgur.com/DLHMGyg.png
[7] http://i.imgur.com/AswjnXN.png
[8] http://i.imgur.com/u1zx8Wj.gif
[9] http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf (page 220)
[10] http://en.wikipedia.org/wiki/Savings_and_loan_crisis#cite_no...