Today I spoke to a friend who's in a very bad mood. On Monday, he had $30,000 worth of Wachovia stock. Today, they're worth about $2,000. He's just one of the growing number of casualties resulting from out current financial crisis.What should we be doing?
Thankfully, the Tri-City African-American Chamber of Commerce has scheduled a panel discussion to answer that question on Saturday.
Where: Nationwide Insurance, Village West Shopping Center, W. Tilghman St. and Cedar Crest Blvd in Allentown (next to Blockbuster)
Time: 9:00 am to 12:00 pm
Fee: Free. Breakfast will be provided
Please RSVP to: Phillip Matthews 610-821-1281
Panel participants: Suzanne Fields, Esq, Attorney at Law; Gregory K. Lauray, Certified Public Accountant, Gregory K. Lauray & Co.; Phillip Matthews, Insurance Consultant, Nationwide Insurance; Carlton Taylor, Financial Advisor, Charles Schwab; Tressie Woods, Regional Vice President, Primerica Financial Services.
Gregory Lauray, who happens to chair the Tri-City African American Chamber of Commerce, has the following insight:
"The only precedent for the recent economic tumult that we've encountered is the Great Depression of 1929. The current situation was entirely predictable as our nation moved to financial alchemy and imprudent lending as the primary bases for economic growth. The recent proposals for spending $ 700 billion to bailout the nation's financial institutions is not going to address the core economic issue of job growth. In part, the high levels of debt that some of us have taken on is related to the lack of income growth, so borrowing became a substitute for stagnant income growth.
"The policies that are being pursued by the US Treasury and the Federal Reserve are going to cost us in two ways: inflation and more taxes. In other words, the basic items we need are going to cost us a lot more while the government taxes us more to pay for bailing out the guys who had the party.
"Navigating in this environment will be challenging and the chamber has planned a panel discussion to talk about this. A team of professionals has been assembled to answer your questions and to provide guidance. Here are the topics the panel will cover:
1) How to restructure your debts
2) Bankruptcy: What does it mean and when it is appropriate to file
3) How to protect your assets
4) What is safe to invest in
5) What to do if you owe back taxes
If you have questions, we'll have answers. Please see the details below for time and place. I look forward to seeing you there."
21 comments:
Bernie,
I really appreciate your posting this for us. I’d also like to thank you for your blog as it is truly a service to the Lehigh Valley. Our panel discussion is open to all and I’d like to take this opportunity to extend an invitation to all of your readers to attend it.
To be sure, there’s plenty of blame to go about for how we got into this mess and the next few years will certainly be full of analysis and study on this period. I read your blog often and haven’t commented before. I did want to take the opportunity to dispel what appears to be an ill conceived and unsupported attempt by some of your posters to portray this mess as being the result of subprime lending being mandated by the Community Reinvestment Act. If that were the case, why is the problem affecting international banks as well? Was there a global CRA mandate forcing European banks to lend to minorities? Is it really credible that Bear Sterns Merrill Lynch, Lehman, Wachovia, WAMU, Freddie Mac, Fannie Mae, AIG, Fortis and etc have all been brought low because of being forced to lend to minorities pursuant to CRA mandates? I suppose that minority communities should also shoulder the blame for Ford and GM lining up at the government trough for $ 25 billion because they were forced to make SUV’s.
The notion that CRA mandates caused this crisis borders on the ridiculous.
In US economic history, there are several things that one can point to as leading up to the current situation. Some believe that removal of the US dollar from the gold standard under Richard Nixon is the beginning of our current problems as this gave the US Federal Reserve the ability to print money at will. In fact, this particular crisis has it genesis in the easy money policy pursed the US Federal Reserve under Allan Greenspan. Greenspan turned on the monetary spigots in the aftermath of the September 11th attacks and that money effectively found itself in the housing market with the resultant effect being wildly inflated home prices fueled by excess credit. In part, the blame for this crisis can be laid at the feet of the greed and avarice of commercial banks, investment banks and hedge funds as they ran amok in a largely unregulated/deregulated environment. There’s no doubt that the prolifigate spending habits of the American public are to blame as well.
A necessary prerequisite for solving problems are truthful premises that one begins with. The CRA argument is so far away from the truth that no useful solution could ever come out of that premise.
Gregory
The reason CRA is central to this is that the loans from it were placed into MBS, mortgage back securities and another investment vehicle that currently escapes me. There were also derivatives off the MBS and they too were sold. These securities were sold world wide. That is one of the reasons why the Europeans and the Chinese, who hold several Billions of dollars of these things, are a bit perturbed at us. On top of all this Freddie and Fannie, who were not fully funded, bought up a pile of these bad mortgages.
Banks were making loans to folks who did not even have to porvide an ID. Many had low or no credit, were not working and did not have a qualifying income. You need to research the following topics: The Glass-Steagall Act, the Gramm-Leach-Bliley Act, and the Community Reinvestment Act. Guarantee you will be amazed.
Chris, are you thinking of CDO's (Collateralized Debt Obligations)?
Greg, I agree w/ Chris, CRA most definitely played a role here. I also hold others accountable that were outside the Fannie/Freddie framework.
I am on record that I believe the original intent of CRA (making loan in communities where you take deposits) was fine, but that it was bastardized into something completely different in the 1990s.
I can tell you horror stories about federal regulators forcing the bank where I worked to make loans that we knew weren't good loans because of CRA. If we didn't make the loans, we received an "Unsatisfactory" CRA rating and that caused all kinds of grief for us. So we booked them, kept as few as we could and sold the rest off, primarily to Fannie.
While CRA didn't have anything to do with speculative real estate in Florida and California, it most definitely did have a role in this debacle.
The Banker
Banker
Yes, CDOs were the other items. I would also say that George has a point on the flow of money, I though Volker had given us our lesson on that. I wish the Fed would move to get the dollar higher and cut inflation. I belive that we have been sold a bill of goods on inflaion for years--how do you leave something like oil out of the equation?
Let me make one other observation on CRA. It caused good people to not listen to their ethics and morals. I am sure many people in the banking industry were not happy writing these loans and certainly found themselves in a moral dilemma.
In closing I believe we need to rebuild the industrialized United States that will not only allow us to be self sufficient, it will provide us with a base to insure the increse in income that will not come in a service society. That should be evident at this point.
Gentlemen,
I disagree with the notion that all of the problems in the credit markets can be laid at the feet of CRA.
This problem is directly tied to Greenspan's easy money policy and everyone and his mother borrowing on the short end of the yield curve and investing long. It was the search for higher investment yields combined with securitization created the fuel for all of the crazy lending that went on. Did CRA mandate liar loans, option ARMs and all this other crap that folks were using to shoehorn themselves into a house? Did CRA make Bear Sterns, Merrill and the rest of these guys leverage themselves like a hedge fund? Did CRA create record trade deficits that are being funded by China and the Saudi's? I think not.
The basic and real problem is the movement of our economy from making real stuff to financial alchemy as the primary fuel for economic growth.
Good post Greg. But you are preaching to the extreme right wing. The idea that greed existed with 'good and virtuous' Bankers and Realators will not serve you well with this crowd. I'll try to help, if I may.
Darn that Bill Clinton and his Fannie Mae and Freddie Mac and the socialist poor living over their heads. Now thats the ticket. Oh and Obama too.
Anon 12:08am, from my perspective there is blame on both sides of the aisle.
Fact is, CRA during the Clinton adiministration was bastardized into a terrible regulation that supported bad lending. It's not good to make loans to people who can't afford them and that's what Gov't regulators forced banks to do - I know, I was there.
Fact is, the "easy money" days during the Greenspan Fed led to speculation in real estate the likes we've never seen. Real estate cannot appreciate 20 or 30 or 40% annually. We are paying mightily for that now.
Fact is, Wall St. contributed heavily as well through its involvement in creating financing structures that theoretically mitigated risk associated with all of the above, and get rich doing it. It didn't work.
There is so much damn responsibility everywhere for this debacle it sickens me. But don't let Gov't (not just democrats, all of them, Ds, Rs and Is - hell, I'll throw in the Socialist up in VT just so we don't forget he's out there) off the hook, they played a big role here as well.
The Banker
Greg
I don't necessarily disagree with you as much as my emphasis is on the CRA as the central cause of this. Banker pretty much hits the proverbial nail on the head. Certainly the Greenspan easy money policy added to the mess.
As for things like liar loans and 100% loans with ARMS that reset at higher rates, I must say I am not sure who was the brainchild of those lending vehicles. ARMS have really been around for a long time but they were not abused as they have been during this mess. These loan programs came about so the lenders could make their quotas in order to get a good score from CRA regulators. On top of that the buyers of loans, Fannie and Freddie, had their books cooked by Raines and others and they did not have enough in reserve. The question is how do we handle those two whatever they are. Do they go private or government owned.
Banker
I have a question for you. Currently FDIC covers deposits up to $100K. If a bank fails, does the FDIC pay every depositor all they had in the bank at one shot or can they spead tha $100K payment out over a particularly time span?
anonymous 12:08
I hope you are not one of those silly people who belive that Realtors set the price of homes. For your enlightment Realtors provide a seller with a comparable market analysis that displays similar homes that have sold in the area within the past 3-6 months. The result of the research and appropriate adjustments is a "price range" that tells the seller that he should expect offers within that range. As you might imagine the top of the range becomes the list price. Once the list price is determined the home will be visited by buyers who have countless places to go today to view homes many times before they visit. They will employ a buyer agent who will supply them with a CMA on homes they are interested in and once that is done the buyer will make an offer. Negotiations will occur and an acceptable price will be agreed upon by both parties or the deal will not occur. It is actually one of the few areas where we haggle back and forth over the price of something. Let me also remind you that our commission and term of agreement length on the listing agreement are also negotiable. Have you eveer seen a lawyer, doctor, teacher, or union worker do that?
Did we make money, yes we did but I can tell you that in the good times while the money is good the expenses are high and the hours are late.
Chris, the FDIC is required by statute to pay depositors on covered accounts "as soon as possible" after an insured bank fails. It typically happens immediately or very shortly thereafter. Coverage includes principal and accrued interest on the account.
There was an urban legend floating around that the FDIC would pay covered claims over a period up to 99 years. Not true.
The Banker
Unfortunately the considerable effort expended to discover and explain the causes of the current credit crisis has devolved into a finger pointing exercise designed to assign blame. This process has been exacerbated because we are in the midst of a presidential election year. Rather than attempting to assign blame for why the patient is in cardiac arrest, we would do better to try to diagnose the problem to aid the evaluation of alternative solutions. My semi-informed take:
Since the 1950s, with the advent of Levittowns etc., home ownership in this country has been viewed as a socially valuable thing. There has been broad consensus that by increasing the percentage of people that own their homes we will accomplish all sorts of social good – Habitat for Humanity, for example, strongly takes this view. Over the years the government has intervened in one form or another in the market to help accomplish this goal. This intervention includes the sponsorship of FNM and FRE (the so-called Government sponsored entities), the CRA, HUD targets for FRE and FNM regarding how much of their financing should go to “low-income” borrowers as well as a host of other programs, tax breaks and government agencies. To a large extent these initiatives accomplished the immediate objective of dramatically increasing home ownership.
The financial marketplace responded with new products to meet customer desires and to further facilitate the desired goal of expanding homeownership. What used to be a very limited range of mortgage options was vastly expanded.
For a long period of time housing prices seemed only to go up – looking at the Case-Shiller Index, from 1987-2006 there was only one year when housing prices declined – in 1990 prices declined 2.8%. For many the key to prosperity seemed to be to become a homeowner as fast as possible.
A whole host of people participated in building the engine that facilitated the fulfillment of this “American Dream.” Local municipalities became friendly to developers, developers maintained a steady development rate, mortgage brokers became increasingly adept at “guiding” househunters through the mortgage approval process, appraisers were happy to oblige the mortgage brokers, sometimes even “home inspectors” got in on some action. In addition, Wall Street bankers, happily developed the various insurance wrappers and securitization vehicles to aid in the funding of these mortgages. A critical element in this process was to create AAA rated paper that could be sold to institutional investors (pension funds, insurance companies etc.) -- this introduces the ratings agencies (Moody’s S&P, Fitch) as another significant contributor to the feeding of this engine.
All of this worked reasonably well as long as there was slow steady growth in the value of houses. Sure some people wouldn’t be able to afford to make payments, but those strapped for cash could sell their house to an eager bidder or take out a HELOC to avoid foreclosure. The AAA paper holders got paid and the engine seemed to be working fine. All the various people were happy taking their “fair share” of the lucre created by this engine.
Then a bubble mentality set in. Home prices went up nearly 11% in 2002, 12% in 2003, nearly 16% in 2004. Suddenly anyone that owned a home felt very well off. Those that didn’t own one felt very left out. Prices kept going up and for many the “dream” seemed to be getting further and further away as their salary increases were significantly less than home price increases. Maybe they checked out that nice new development. Maybe a real estate broker reminded them how they “just couldn’t lose” if they bought in at the preconstruction price. “Why not buy two – you could flip the second one and use the profit for your down payment on the first.” Not dissimilar to how many felt watching the dot com millionaires and the internet investors make their stash. In 2005 prices were up another 11.5%, further fueling the fire. Some whispers of a “housing bubble” emerged, but what did those party poopers know. Then in 2006 the market finally “corrected” for a 1.7% decline. The second worse annual decline since 1991 – hmm many thought that wasn’t so bad. But now was the time to pounce, prices seemed reasonable, get in now before we see those 10% plus annual increases – then the bubble began to burst. In 2007 prices decreased 14.2%. Now when people couldn’t make their payment, it wasn’t so easy to sell, there wasn’t any equity to obtain a HELOC. Suddenly a lot of mortgages issued in 2006 and later began to default and the holders of the AAA paper engineered by Wall Street found that they weren’t getting paid, the paper was worth much less than the price at which it was issued. The Wall Street banks found themselves holding mortgages in inventory that they couldn’t hope to sell and had no real clue as to what they were worth.
So now we are in a situation where we don’t know the true value of houses, significant members in good standing on Wall Street have collapsed and the rest of Wall Street is scared to lend because it doesn’t know the value of each others’ loan portfolios. This is an acute problem that caused great fear in the market. Banks became unwilling to make the safest of loans (buying very short term obligations of industrial companies). Short term treasury yields were actually negative for a brief period of time because many institutions saw them as the only safe investment. The Treasury simply had to do something to attempt to bring the credit markets back to a normal functioning mode.
Regardless of what one thinks about the current bill (personally, I don’t like it much), it seems difficult to maintain that this is any more than applying paddles to a code blue, but very sick patient. It may very well get the patient breathing again, but if it causes us to pause in attempting to address the underlying issues, it may very well do significant harm.
Brian Thomas
Brian Thomas
Splendid post and extremely informative.
I do believe it is important to analyze and assign blame, particularly when an unsupported assertion is made that CRA mandates are the primary reason that we’re in this mess and, by extension, African-Americans and Hispanics are therefore at the center of the cause of it. This is a claim that has gained currency mainly from it being constantly repeated rather than being supported in fact and it needs to be rebutted. Rather than being the beneficiaries of some sort of largess thanks to CRA, African-American and Hispanics were targets of predatory lending
There’s nothing in CRA that requires imprudent lending. Subprime lending actually had its genesis in two pieces of deregulatory legislation in the early 1980’s; the Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of and the Alternative Mortgage Transaction Parity Act (AMTPA). DIDMCA deregulated loan rates by eliminating usury caps while AMTPA opened up the origination of loans using features like negative amortization, variable interest rates, balloon payments and etc. As we all know by now, all of the aforementioned are prominent features of subprime mortgages.
In finance, the yield curve refers to distribution of interest rates over time or maturity with respect to a debt instrument. The normal relationship of interest rates to time is such that short maturity instruments, such as commercial paper, have interest rates that are lower than rates that might apply to something like a bond with a maturity of 10 years. The US Federal Reserve influences short term rates of interest with monetary policy. Greenspan’s actions at the Federal Reserve in keeping short term interest rates low for too long created what is known as the “carry trade”, where investment banks, hedge funds and others would borrow on the short end of the curve and re-lend at higher long term rates. There was no greater temptation to boost investment yields than to flood the market with subprime mortgage originations and attempt to defuse the risk with securitizing or repackaging these mortgages as AAA rated paper with a higher yield. As investment yields were generally low worldwide, insurers, pension funds and others gladly snapped up this paper and virtually generated the fuel for subprime mortgage lending along with all mortgage lending. (Our problems now are well beyond sub prime mortgages.)
CRA mandates for lending to African-Americans and Hispanics have, at best, a tenuous relationship to this entire state of affairs. It was the global search for yield along with the “carry trade” that created this entire mess. We also have deregulation to thank for the removal of the wall that used to exist between investment banking and commercial banking with the repeal of the depression era Glass- Steagall act. It was the combination of these factors that created all the abuses and the mess that’s on our hands currently.
Does election year politics have anything to do with this? Yes and that’s why there’s an attempt to obfuscate the truth by this banter about CRA. That’s not intended to be an attack on anyone here per se, but I do suggest that research is necessary prior to repeating something as fact when it’s not supported.
As to the rescue plan, this will do little other than to ultimately debase the currency and leave us dealing with hyperinflation. The real investment that needs to be made is in rebuilding an economy that can generate good paying jobs. In other words, we need a real economy where we make real stuff and not one based on financial alchemy. The new deal era created the civilian conservation corps to build, among other things, the nation’s roads and bridges all of which are now in urgent need of repair. We need something like this to really put people to work along with creating a multiplier effect with them paying taxes and buying goods. That will do far more than $ 700 billion to buy a bunch of worthless securities while allowing the banks to clean up their balance sheets with money they probably won’t re-lend anyway.
Gregory
When this whole mess came to light my first thoughts were of the Glass-Steagal Act and what had happened to it. I kind of remembered that somewhere it had disappeared from the scene. Upon checking I discovered that indeed action had been taken at the judicial level that had eroded that legislation. Then in 1998, Citi bank merged, albeit illegally, with Travlers and created Citigroup, the conglomerate we know today. When told that this merger might be in violation, officials at Citigroup stated that they believed the legislation governing their merger was on the way. Sure enough, the Gramm-Leach-Bliley law was enacted and Glass-Steagall was no more. The Community Reinvestment Act came up again with Gramm. Apparently Senator Gramm wanted legislation that would force groupl like ACORN and NCAC to register their relationship with the banks they were associated with in their community organizing capacity. It was Gramm's contention that these groups and individuals were blackmailing the banks subject to CRA approval. At the time $1 trillion was tossed out into the neigborhoods that were served. Keep in mind that the original intent of CRA, and I am sure you know this, was to stop the "redlining" of areas where banks would not make loans and realtors would not show homes to minorities. This, of course, is illegal. I don't think that anyone is questioning the good intent of CRA but as the old saying goes, the road to hell is paved with good intentions.
I got the impression that initialy there was not a lot of regulation of the banks under Carter and others despite the fact that four government regulation offices were suppose to be tending to business. It appears that the real activity took place under the Clinton administration. President Clinton let it be know that he would veto GLB if anything was done to curtail the CRA. I believe that Clinton did this to shore up minority and specifically black American support for the Democrat party since he was already, my tongue in my cheek, America's "First Black President" I believe that Clinton's actions caused lenders to create loan programs or enhance the ones they had for said groups in bad neighboroods. I believe lenders looked the other way when it came to qualifying people, well documented in work done by the WSJ. I think that you had flippers, illegal immigrants, and yes, people who could have had a regular mortgage, take out subprome mortgages that at the time appeared advantageous to them for what ever the reason. Much like Sarbanes-Oxley that established mark to market CRA was the lead domino and when it fell it took a whole bunch of other stuff with it in the collapse.
Please feel free to tell me where I am off or wrong in my analysis. I am very concerned about this because I still do not have a handle on all of it
I want you to know that I agree with you on the employment issue but no government involvement other then an tax environment that favors the re-industrialization of our country. The $700B is not a solution it is a finger in the dyke.
Chris,
Thanks for your response. Here's mine.
The notion that Bill Clinton had to shore up African-American support with CRA is without merit in my view. The democratic party has enjoyed 90+ % of the support of the African-American vote for some time, so there was nothing to shore up. Of course, that might not hold now in light of his antics during the democratic primary, but that would only come into play if Hilliary ran for president again.
Lenders created the new products due to the deregulation and the carry trade scenario mentioned in my previous post. These were the primary drivers of subprime and conventional mortgage activity. When lending became unhinged from banks actually making and servicing loans, risk was masked with the securitization mechanism. The actual risk was unchanged and came back to bite with a vengeance. These are the factors that are the "lead dominoes" rather than CRA. I see CRA lending as nothing other than a red herring that obfuscates the real issue.
We are in partial agreement on your last point about the need to re-industrialize the nation. Where we depart is where you see no government involvement other than setting the tax environment. Whereas that's appropriate in some instances, I'm not an adherent to the idea market driven solutions are the best in all instances. As a matter of fact, it's pretty clear that the government actually is not operating that way with the current situation because if that were the case, the market solution says that many institutions should have simply failed rather than be saved with the moral hazard of the Fed or the US Treasury. If we're going to be on the hook for bailing out the guys who had the party, we should certainly give some consideration to the folks who missed it.
Gregory
I guess my next question is why did the lenders create the new products? I find it hard to believe that a lender would deliberately lend money to people who had low income and bad credit scores and possibly was an illegal immigrant. I have always looked upon lenders as a pretty conservative group of individuals.
I started Bamber's book calle Bear Trap and he points to a guy by the name of Doll who initiated the idea of bundling mortgages back in the 1970s. Bamber worked at Bear Stearns in a managerial capacity and he pretty much indicates that everybody got caught up in this procedure with part of the reasoning tha Fannie and Freddie told them to go ahead they were good loans. I know that some have said that the CRA's were just a small percentage of this but during the Clinton Administration a trillion dollars was tossed into this program. I received a link to a You Tube story called "Burning Down The House--What Caused Our Economic Crisis. Here is the link address http://www.youtube.com/watch?v=NU6fuFrdCJY. It runs quickly and you will want to look at it a couple of times--I know I did. Let me have your opinion on it
Chris,
The Youtube video is clearly from the McCain camp and can not considered to be research material that supports anything.
Greed trumped prudent lending decisions for the reasons I mentioned previously.
Gregory
How did you come to the conclusion that it came from the McCain's camp? Do you have some type of inside info. Also you did not answer my initial question on why lenders would literally do a 180 and all of a sudden give up tired and true guidelines for making loans. I don't disagree with you on the greed part but these MBS's COD's and other SIV's showed up in the 1970s and were taken on by hedgefunds in the 1990's. Bamber points out that housing was looked upon as a safe bet until the ARMs kicked in and the less then stellar owners could not make their payments.
Let me also note that the FBI with an additional 1000 agent request, is looking into a lot of this stuff and people are going to go to jail. One of the things they are looking for is the $1trillion tossed into the CRA
Chris,
I concluded that the video came from the McCain camp due to its attack on Dems. Moreover, I previously explained the carry trade and the impact it had on risky lending. I believe that I've fully rebutted the contention that CRA is responsible for this mess.
If you wish to establish your argument that CRA is responsible for the current situation, you'll need to provide something other anecdotes and McCain camp videos. Perhaps you can summarize the points raised in Bamber's book.
Gregory
Your answer to the You Tube show was disingenious. Because there were attacks it came from the Republicans. Are you telling me that the Democrats never attack Republicans. A statement in and of itself is not necessarily the truth.
As to Bamber let me give you a bit of a preview. Back in the late
1970's James Dall from Salomon Brothers packaged mortgage bonds. It was in 1977 that the Community Reinvestment Act was passed. Bamber notes that mortgages are not the same and that some who received a mortgage were less then spectular homeowners due to the location of the home or that they had less then sparkling credit and credit problems. He notes that some financiers thought these folks should have part of the American Dream and they were willing to give it to them. Thus these folks were put into high risk, subprime mortgages. This supposedly gave some lenders an incentive to go with these vehicles. The primary reason they liked these bonds was because they were an "asset back security" or what they refer to as ABS. Historically speaking, home prices go up and if the buyer has to default the holder of the bond has the house and supposedly a profit. But two other things can happen to homes, the price can remain static for a period of time or they can and do go down.
At Bear Sterns, they took things one step further. They put the mortgages into Structured Investment Vehicles and placed them into a hedge fun.Bear had two such funds and they went belly up. The gentlemen who ran these funds went to jail for lying to their clients. These guys had made a huge mistake in that they did not cover their posteriors as one can do. Stearns had a guy by the name of John Paulson who went the other direction wagering that home prices woult plummet and defaults would be huge. Paulson made a pile of money. Bamber has yet to state whether these mortgages were from Community Investment Actions or not. However, let me point out to you that in a White House Press release, Secretary of the Treasuy, Lloyd Bentsen stated that the "only thing that ought to matter on a loan application is whether or not you can pay it back, not where you live." Bentsen goes on to explain that they are going to put all the regulation responsibility under Gene Ludwig at the OCC. Ludwig pointed out that Clinton wanted to reform the CRA with less regulation. So they reduced the 12 "CRA assessment factors with three tests---a lending test, a service test, and an investment test." The lender would have to show that they were making loans, providing services adn making investments in the communities. This was information provided from a December 8 1993, press secretary's office.
Now keep in mind that the Dems. attempted to put 20% of the $700 billion into the hands of ACORN who is again being investigated for voter fraud and has extorted funds from the banks looking to grow. If CRA isn't central to all of this it is certainly damn close to it.
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