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Gayle in MD
06-15-2010, 11:07 AM
Robert KuttnerCo-founder and co-editor of The American Prospect
Posted: June 13, 2010 06:52 PM BIO



Don't Blame the Dream of Home Ownership

Here is a fable that is making the rounds. It is a collection of half-truths and outright lies:

The financial meltdown was the result of too many people pursuing the American Dream of home ownership. People who couldn't really afford to be homeowners became speculators. Government added to the damage with cheap mortgages, misguided laws such as the Community Reinvestment Act, and overgrown government-sponsored agencies like Fannie Mae and Freddie Mac.

This stuff is a staple of rightwing talk shows. In a moment, I will rebut each element of this storyline, but first I want to single out a wildly misleading piece by the New York Times financial columnist Joe Nocera. The piece, which ran in Saturday's business section, was titled "Wake-Up Time for a Dream."

The dream -- surprise -- is home ownership. It is depressing that a rightwing theme has invaded the mainstream Times.

Nocera writes, "The financial crisis might well have been avoided if we as a culture hadn't invested so much political and psychological capital in the idea of owning a home. After all, the subprime mortgage business's supposed raison d'etre was making homeownership possible for people who lacked the means -- or the credit scores -- to get a traditional mortgage."

Now this is just malarkey. And the Nocera piece is worth reading in its entirety to appreciate just how an influential financial columnist can get a critically important story so utterly wrong.

For starters, the homeownership rate was already 64 percent in the mid 1960s. It peaked at about 69 percent just before the bubble burst -- but was nearly 68 percent in 2001 before subprime lending took off. Back in the 19th century, thanks to the Homestead Acts of the Lincoln era, homeownership (mainly family farms) was well over 70 percent in much of the west.

Ordinary working people can become homeowners and accumulate property wealth when two elements are present. Government programs have to be competently run and prevent private-industry sharks from abusing them. And working people need a degree of financial predictability in their job security.

In the period between, Franklin Roosevelt and LBJ, both factors prevailed. The Federal National Mortgage Association, later privatized as Fannie Mae, was part of the government. If mortgages met its standards, FNMA bought them from local banks and replenished bank working capital. Just as importantly, wages of working people steadily rose, so that more and more ordinary Americans could afford mortgage payments. Not surprisingly, homeownership rates rose. After Congress passed fair housing legislation in 1968, so that minorities could get a fair shot, black homeownership took off, too.

But beginning in the 1970s, wages stopped increasing with productivity growth. And the financial sharks got hold of programs intended to promote homeownership.

A newly privatized FNMA increasingly thought more about using its implicit government guarantee to increase market share and enrich its executives and shareholders. Not until Bush II, however, in 2004 and 2005 just before the housing collapse, was Fannie directed by the political masters in the White House to lower its standards and purchase pools of dubious mortgages so that Bush's "Ownership Society" could claim credit for increasing homeownership rates.

Fannie Mae, a corrupted agency, has become a handy all purpose scapegoat. The lack of a provision in the financial reform legislation to resolve the mess at Fannie has become the main alibi that Republican senators give for voting against the whole reform package.

Nocera contends that the subprime industry's "raison d'etre" was to promote homeownership "for people who lacked the means -- or the credit scores -- to get a traditional mortgage." Sorry, Joe. The industry's reason for being was so that financial wise guys could make a bundle at the expense of suckers. Low income prospective homeowners were merely useful props. They were the poster children, but not the real purpose.

(In 1994, the same Nocera was celebrating prosperity-for-all in a wildly over-optimistic book titled "A Piece of the Action: How the Middle Class Joined the Moneyed Class." If his latest debunking is Nocera's way of doing penance for his own earlier misplaced euphoria, it is just not helpful.)

The pity is that carefully run government programs, from the Homestead Acts to Neighborhood Housing Services, to the good work of community development financial institutions such as Chicago's ShoreBank, have indeed increased the rate of homeownership among working people, and have done so by avoiding bait-and-switch products like subprime loans, not promoting them. The culprit is not the dream of owning your own home, but the utter cynicism of the financial sharks who took advantage of people innocently pursuing the dream.

Large numbers of subprime loans were in fact marketed to elderly people who had low mortgage debts, who could not live on fixed incomes and who needed to refinance their homes to take out equity. This was not about promoting homeownership but destroying it. Many of these victims are now losing their homes. The stripping of home equity is partly a story of a collapsing pension system in the face of rising costs for America's seniors.

The 1977 Community Reinvestment Act, which encouraged banks to keep credit flowing to less affluent neighborhoods "consistent with sound lending standards" is not part of this fiasco at all. Had CRA been enforced, subprime loans that waived underwriting standards would have been illegal. Most of the mortgage brokers who retailed subprime loans were not even covered by CRA.

It's certainly true (and no serious person claims otherwise) that 100 percent of Americans will never own their own homes. Some people are too transient or just too poor. Some would prefer to rent. But, maddeningly, one element of the story that the debunkers of the American Dream invariably leave out is the near-collapse of programs for affordable rental housing. Among moderate income Americans who rent, the fraction of income spent on housing rose steadily for three decades.

Ironically, many low income people turned to homeownership as a last resort because they couldn't find an affordable rental -- and the same Bush Administration that gutted subsidies for affordable rental housing refused to enforce laws on the books specifying standards for responsible lending to aspiring homeowners.

A sound housing policy would combine assistance for homeownership with affordable rental housing. A homeownership rate of 70 percent, which is common in several affluent European nations, is perfectly reasonable -- if our political system keeps sharks like the subprime gang from wrecking the system and agencies such as FNMA from being corrupted.

Fannie Mae, which over-reached and went broke as a private company with a government guarantee, is now a ward of the federal government. It should be restored to its original form under Roosevelt, as a public corporation with high principles and high standards.

In the aftermath of the subprime collapse, many hard working lower income people, including a great many African Americans, have seen their dreams wiped out. The home ownership rate in black communities, which were targeted for subprime loans, is in free fall. Brandeis University's Institute on Assets and Social Policy reports a devastating increase in the black-white wealth gap.

The same New York Times recently published a fine piece by reporter Michael Powell on what is happening to the black middle class in Memphis, "Blacks in Memphis Lose Decades of Economic Gains."

The same story could be told about hundreds of predominantly African American neighborhoods.

The villain of the piece is the mortgage meltdown coupled with rising unemployment rates that are the collateral damage of the same financial collapse. The villain is not moderate income homeowners.

These people paid their mortgages on time, and there was nothing wrong with their dream. What was wrong was the failure of their government to keep the private financial industry from stealing the dream.

http://www.huffingtonpost.com/robert-kuttner/dont-blame-the-dream-of-h_b_610594.html

eg8r
06-15-2010, 11:27 AM
I blame the people who signed on the dotted line and knew they could not afford the payment.

eg8r

Sev
06-15-2010, 01:45 PM
If Fannie and Freddie did not exist the meltdown would not have occurred.

I blame the government

Gayle in MD
06-15-2010, 02:43 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Sev</div><div class="ubbcode-body">If Fannie and Freddie did not exist the meltdown would not have occurred.

I blame the government </div></div>

Wrong again. The predatory lenders, and the illogically and unjustifiably low interest rates, were what fueled the crash.

The majority of bad loans occured after Fannie and Freddie got out of the market in 2003, after an accounting scandal. By 06 the crash was inevitable.

Wall Street, and predatory lenders, were the cause, along with corrupted rating agencies, and complicated lending instruments, some hundreds of pages long, which even Greenspan said he could not understand.

It was strictly a case of the wealthy bilking those less fortunate, under them, people who paid their bills, were scamed by predatory lenders, just as the article stated. Middle Class Americans had been long suffering from a severe drop in wages, during the Bush Administration, and some of them borrowed on their homes. Sixty two percent of those who lost their homes, borrowed mooney to pay for health care.

The community Reinvestment Act had been around for over thirty years. that had absolutely nothing to do with the crash, nothing.

So it wasn't at all about poor people running out to buy houses, it was about scumbags getting on the phone, calling the elderly, and the ignorant, who were barely getting by, and enticing them. It was about people buying up two and three and more, investment properties, jumping on the band waon, which was made so enticing by the low interest rates.

It was about greed, more than anything else.

G.

Deeman3
06-15-2010, 03:09 PM
I am sure those evil lenders, and most of can agree they were, either tied up all these unsuspecting poor unfortunates and forced them to sign loan agreements without having read them, understood them or even had the capability to know what they were getting into.

It may have been, indeed, about greed more than anytnhing else. However, it was greed on both parts and sheer ignorance on one side's part that loans might have to be paid back and that there is no assurance, at least in the past, that houses would always go up in value.

I know that some people can't be held responsible for adult decisions becuase they simply can't make good decisions based on their gulibility but perhaps that is why we should not back loans to those very people. If the benchmark was, "Do you want a loan and how much?" we are all getting what we deserve in allowing everyone access to money despite their education and ability to work, pay and accept risk.

The elderly and the ignorant (at least the normal ignorant) were not the bulk of the problem here.

wolfdancer
06-15-2010, 04:34 PM
As I remember....every country bumkin bank manager was under pressure then to approve loans....I believe that I linked to that article.....
BUT pointing a finger, doesn't solve the crisis.
There is but one solution to America's financial problems, besides nuking China and erasing that debt........
Soylent Green !!!

Sid_Vicious
06-15-2010, 07:08 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: wolfdancer</div><div class="ubbcode-body">As I remember....every country bumkin bank manager was under pressure then to approve loans....I believe that I linked to that article.....
BUT pointing a finger, doesn't solve the crisis.
There is but one solution to America's financial problems, besides nuking China and erasing that debt........
Soylent Green !!! </div></div>

You are correct Jack, and it didn't take any twist of arms to get loan papers signed by buyers. All it took was a loan officer ready to ignore the logic of loaning to these idiots. I think the mortal term would be, "Dangling the carrot" by the lenders. That was wrong for everyone, but it's entirely stupid to lay the blame at the buyer's feet. Think about it...sid

Sev
06-15-2010, 07:24 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Gayle in MD</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Sev</div><div class="ubbcode-body">If Fannie and Freddie did not exist the meltdown would not have occurred.

I blame the government </div></div>

Wrong again. The predatory lenders, and the illogically and unjustifiably low interest rates, were what fueled the crash.

The majority of bad loans occured after Fannie and Freddie got out of the market in 2003, after an accounting scandal. By 06 the crash was inevitable.

Wall Street, and predatory lenders, were the cause, along with corrupted rating agencies, and complicated lending instruments, some hundreds of pages long, which even Greenspan said he could not understand.

It was strictly a case of the wealthy bilking those less fortunate, under them, people who paid their bills, were scamed by predatory lenders, just as the article stated. Middle Class Americans had been long suffering from a severe drop in wages, during the Bush Administration, and some of them borrowed on their homes. Sixty two percent of those who lost their homes, borrowed mooney to pay for health care.

The community Reinvestment Act had been around for over thirty years. that had absolutely nothing to do with the crash, nothing.

So it wasn't at all about poor people running out to buy houses, it was about scumbags getting on the phone, calling the elderly, and the ignorant, who were barely getting by, and enticing them. It was about people buying up two and three and more, investment properties, jumping on the band waon, which was made so enticing by the low interest rates.

It was about greed, more than anything else.

G. </div></div>

Sorry but the government was the root of the problem. Its meddling in the free market allowed for the situation to arise.

The community reinvestment act should have never been allowed to pass. Incremental abuse of he system created a snowball effect.

If Feddie and Fannie did not exist all that bundling and selling of loans would have never occurred.

LWW
06-16-2010, 05:12 AM
That article is delusional.

LWW

Sev
06-16-2010, 06:18 AM
Only the article???

Gayle in MD
06-20-2010, 09:15 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Deeman3</div><div class="ubbcode-body">I am sure those evil lenders, and most of can agree they were, either tied up all these unsuspecting poor unfortunates and forced them to sign loan agreements without having read them, understood them or even had the capability to know what they were getting into.

It may have been, indeed, about greed more than anytnhing else. However, it was greed on both parts and sheer ignorance on one side's part that loans might have to be paid back and that there is no assurance, at least in the past, that houses would always go up in value.

I know that some people can't be held responsible for adult decisions becuase they simply can't make good decisions based on their gulibility but perhaps that is why we should not back loans to those very people. If the benchmark was, "Do you want a loan and how much?" we are all getting what we deserve in allowing everyone access to money despite their education and ability to work, pay and accept risk.

The elderly and the ignorant (at least the normal ignorant) were not the bulk of the problem here. </div></div>

If Real Estate Agents, and Loan Officers, and Banks, and lending and rating institutions had lived up to their fiduciary responsibilities, and Greenspan, hadn't looked the other way, in order to maintain Bush's ownership society policies, none of it could have happened.

My personal opinion, is, and always has been, that people should have to save twenty percent down, and have a good credit rating, in order to buy a home, unless they are returning Vets.

IMO, Real Estate and Loan Officers, and financial institutions, along with their faulty designer paper work, and ratings agencies, were the main culprits.

None of it could have happened, without their original greed from the bottom up, and as well, from the top down, beginning with Greenspan.

I was a Real Estate Agent in my younger years. There is no way in hell that I would have failed to dissuade one of my clients from biting off more than they could afford. NO WAY!


After that, IMO, investors bought up properties, builders included, I know quite a few, BTW, who no one would consider to be uneducated people, more like wheelers and dealers, and also individual wealthy investers, buying up multiple properties, and large tracts of land to build on, experienced people, who also thought there would be no end to the value surge in Real Estate.

Investors walked out of multiple properties, leaving the keys on Kitchen counters all over the country.

Even with all of that, without Wall Street's corruption, we'd have never seen the disaster grow to critical proportions, threatening global deperssion.

The so called professionals involved, were clearly very unprofessional. Do you really think that people who worked for country wide, for example, didn't know they were pusing on liar loans? It was after Fannie and Freddie got out, 03, that the predatory lenders took over and increased their calling and scouting looking for people who were most vulnerable.

The original terms of the CRA, were changed during the Bush Administration. Like with every other industry, during Bush/Cheney, no oversight, no regulatory limits, corruption and negligence was overlooked. CRA has been around fofr over thirty years, why did everything suddenly become unregulated GREED GONE WILD????

The Administration sent clear indicators to every form of business, from Iraq, contractors, to OIL, GO FOR IT! NO GOVERNMENT TO GET IN YOUR WAY!

Subsidies to corporatioins that outsourced jobs, China left to cheat our asses off, and an invitation to fossile fuels, to disregard safety. Cheney gave them all a blank check, to do as they liked, and to hell with the environment, and our underarmored, and in some cases, electrocuted American TROOPS!!!!

Corruption, cronyism, negligence, eight years of it, not easy to turn around in thirteen short months, while fighting two F-ed up wars, and under a collapsed economy.



G.

LWW
06-20-2010, 12:48 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Gayle in MD</div><div class="ubbcode-body">B-B-B-BUT B-B-B-BOOOOSH!!!!</span> at the moon, so you do.

Your countless and inane excuses for the party's sins is becoming an embarrassment.


LWW

eg8r
06-21-2010, 08:19 AM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">If Real Estate Agents, and Loan Officers, and Banks, and lending and rating institutions had lived up to their fiduciary responsibilities, and Greenspan, hadn't looked the other way, in order to maintain Bush's ownership society policies, none of it could have happened.</div></div>All of that still doesn't matter if the borrower is honest with what they can afford. No one is more responsible than the other and it gets old seeing you let the borrower off the hook.

eg8r

eg8r
06-21-2010, 08:20 AM
All of that is still moot if the borrower is not honest about what they can afford.

eg8r

Sev
06-21-2010, 02:54 PM
Had the Community Reinvestment Act never passed the relaxing of credit restrictions would never have occurred.

Getting credit for a house was stringent in the past. The government attempted to level the playing field while not considering the unintended consequences of their actions. By doing what they did they created an avenue for abuse that previously did not exist.

Gayle in MD
06-21-2010, 03:20 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: eg8r</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">If Real Estate Agents, and Loan Officers, and Banks, and lending and rating institutions had lived up to their fiduciary responsibilities, and Greenspan, hadn't looked the other way, in order to maintain Bush's ownership society policies, none of it could have happened.</div></div>All of that still doesn't matter if the borrower is honest with what they can afford. No one is more responsible than the other and it gets old seeing you let the borrower off the hook.

eg8r </div></div>


<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> Community Reinvestment Act Makes Bankers Stupid, According to AEI Research
One might have hoped that one collateral benefit of the end of the election season would be the end of the attempt to pin the financial crisis on the Community Reinvestment Act, a 1970s law designed to prohibit redlining (the widespread practice of not lending money to people in poor neighborhoods). Unfortunately, Peter Wallison at the American Enterprise Institute (thanks to one of our commenters for pointing this out) has proven that some people will never give up in their fight to prove that the real source of society’s ills is government attempts to help poor people. Regular readers hopefully realize that we almost never raise political topics here, but sometimes I just get too frustrated.

<span style='font-size: 14pt'>Many people who are more expert than I in the housing market have already debunked the CRA myth. Here are just a few: Janet Yellen, Menzie Chinn, Randall Kroszner, Barry Ritholtz, David Goldstein and Kevin Hall, and Elizabeth Laderman and Carolina Reid. Mark Thoma does a good job keeping track of the debate.</span>
<span style='font-size: 14pt'>One of the main arguments against the CRA-caused-the-crisis thesis is that the large majority of subprime loans, and delinquent subprime loans, and the housing bubble in general, had nothing to do with the CRA; it was done by lenders who are not governed bythe CRA, and was done in places like the exurbs of Las Vegas or the beachfront condos in Florida, not poor neighborhoods (which generally saw less price appreciation than average). So Wallison comes up with a new argument: relaxed lending standards, encouraged by the CRA, caused lending standards to be relaxed in the rest of the housing market. Really, I’m not making this up.</span>I’m going to give you a long quote so I can’t be accused of selective quotation:

The key question, however, is the effect of relaxed lending standards on lending standards in non-CRA markets. In principle, it would seem impossible–if down payment or other requirements were being relaxed for loans in minority-populated or other underserved areas–to limit the benefits only to those borrowers. Inevitably, the relaxed standards banks were enjoined to adopt under CRA would be spread to the wider market–including to prime mortgage markets and to speculative borrowers. Bank regulators, who were in charge of enforcing CRA standards, could hardly disapprove of similar loans made to better qualified borrowers. This is exactly what occurred. Writing in December 2007 for the Milken Institute, four scholars observed: <span style='font-size: 14pt'>“Over the past decade, most, if not all, the products offered to subprime borrowers have also been offered to prime borrowers. In fact, during the period from January 1999 through July 2007, prime borrowers obtained thirty-one of the thirty-two types of mortgage products–fixed-rate, adjust-able rate and hybrid mortgages, including those with balloon payments–obtained by subprime borrowers.”</span>
After some more evidence that rich people were offered (and accepted) new mortgage types, he concludes with this:
<span style='font-size: 17pt'>
Although it is difficult to prove cause and effect, it seems highly likely that the lower lending standards banks were required to adopt under the CRA influenced what they and other lenders were willing to offer to borrowers in prime markets.

At its core, the argument is that the government forced lenders to make bad loans in one market, so they went and decided to make bad loans in other markets. Even conceding some of the premises for the sake of argument, this is illogical. Wallison says “it would seem impossible–if down payment or other requirements were being relaxed for loans in minority-populated or other underserved areas–to limit the benefits only to those borrowers.” It doesn’t seem impossible to me: if you’re running a business, you should be able to understand that you have different target markets, and you have different products for those markets. In fact, if you (the bank) truly thought that you were being forced to make bad loans in one market, you would damned well keep those loans out of your other markets. If lenders are as stupid as Wallison’s argument implies they are, then the entire premise of the American Enterprise Institute – that government should leave businesses alone – starts to look shaky.</span>You can also tell an argument is shaky when an author says “it is difficult to prove cause and effect.” In areas like business, finance, and economics, where there actually are a lot of data, that generally means that it can’t be proven, or it would have been. Wallison’s evidence is that flexible mortgage products became available to the prime market. (Disclosure: I got an ARM when my wife and I bought our house, and we refinanced it into another ARM.) The most obvious explanation of that phenomenon is not that the CRA induced banks to make those products available to some customers, and that put them on a slippery slope to making them available to all customers, but that bank executives decided to make those products available to all customers. Still hoping to pin this on regulators, Wallison says, <span style='font-size: 17pt'>“Bank regulators, who were in charge of enforcing CRA standards, could hardly disapprove of similar loans made to better qualified borrowers.” I don’t know where to start here: someone who is against regulation is trying to argue that the CRA tied the hands of regulators who otherwise would have clamped down on flexible mortgages to rich people? I’m in favor of tighter regulation of abusive mortgage products, but I don’t think the CRA is to blame for lack of regulation.</span>
There’s no need to grant the premises, either. The root of the problem, according to Wallison, was that the CRA forced lenders to lower standards in one market. <span style='font-size: 20pt'>The vast majority of subprime loans were made by institutions that were not even governed by the CRA in the first place. If institutions governed by the CRA chose to follow the behavior of those not governed by the CRA, that was their choice, pure and simple. So not only does the argument suffer a mid-air accident, it never gets off the ground.</span>And there’s another reason for that: the large majority of low-income loans made under CRA were traditional fixed-rate loans, not subprime, and they weren’t even bad loans. Wallison says:

There is very little data available on the performance of loans made under the CRA. The subject has become so politicized in light of the housing meltdown and its effect on the general economy that most reports–favorable or unfavorable–should probably be discounted.

This is a very clear rhetorical tactic: when you can’t find data that you need to support your argument, say the data don’t exist, or that they are so politicized that they should be discounted. (This is the “two sides to every story” argument used so effectively by, among others, people who say that global warming is not happening.) Wallison does, however, cite one study:

One of the few studies of CRA lending in comparison to normal lending was done by the Federal Reserve Bank of Cleveland, which reported in 2000 that “respondents who did report differences [between regular and CRA housing loans] most often said they had lower prices or higher costs or credit losses for CRA-related home purchase and refinance loans than for others.”

This is the sentence immediately before the one Wallison cites, plus the one he does cite:

A large proportion of respondents in all bank-size categories reported that CRA-related and other home purchase and refinance loans have very similar origination and servicing costs, credit losses, and pricing on a per-institution basis. However, the respondents who did report differences most often said they had lower prices or higher costs or credit losses for CRA-related home purchase and refinance loans than for others.

Read that first sentence again: a large majority of banks say CRA loans do just fine. This is Wallison’s source I’m quoting. This is the best evidence Wallison can find, and presumably (since this is his specialty, not mine) he went looking for it. Not only does the plane not get off the ground, but the airline canceled the flight before boarding.

OK, I’ve already spent more of my morning on this than I wanted to, and I haven’t even gotten to the section on Fannie and Freddie.

</div></div>


<span style="color: #000066">Blaming CRA, doen't fly. Without the predatory lenders, and particularly the lower loan ratios that banks were allowed, not enough money behind them to back up their gambling, the situation would never have grown into dangerous proportions.

What Wall Street, loan insurers, ratings institutions, and mortgage companies, did was the crux of the problem. They were out there hustling to fill their own pockets, and writing instruments that people couldn't understand, even Greenspan said much of what was done on Wall Street, was intentionally complex, complicated on purpose, to keep people in the dark.

I have never said that those who fell for the scam were blameless, only that they were the ones who were biloked, by lenders, who were crooked.

G.

G. </span>

eg8r
06-22-2010, 09:17 AM
I am blaming the people who actually signed on the dotted line. These people were not honest with themselves or the banks when they signed on the loan. Now they are in default and they have no one to blame but themselves.

eg8r

eg8r
06-22-2010, 09:18 AM
It is still up to the borrower in the end to make the judgement whether to sign on the line. They were not being honest and knew they could not afford the loans.

eg8r

LWW
06-22-2010, 06:18 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Gayle in MD</div><div class="ubbcode-body"><span style="color: #000066">Blaming CRA, doen't fly. Without the predatory lenders, and particularly the lower loan ratios that banks were allowed, not enough money behind them to back up their gambling, the situation would never have grown into dangerous proportions.
G.

G. </span>


</div></div>

You are just adorable when you try to act smart. Here's a test:

1 - What is a predatory lender?

2 - Who lowered the loan ratios? (Here's a hint ... they were actually raised.)

3 - How were they gambling?

4 - How could a lender expect to make out OK on a loan they new was unlikely to pay out?

LWW