[jeffkrol]

Not that some isn't deserved.. but please minorities taking down our (and the worlds) economy?????????????? Got to laugh.
US Financial Crisis Panel Struggles Over Final Report | iMarketNews.com
Jonathan Weiler: Another Zombie Lie: Republicans Blame Minorities (and Liberals) for Financial Crisis

Lastwa week, an old zombie lie was resurrected when the Financial Crisis Commission of Inquiry reached an impasse. The ten member commission is set to issue a report in January on the causes of the financial crisis. The four Republicans on the commission insisted, however, on actually banning the words "Wall Street" "shadow banking" "interconnection" and "deregulation" from the final report and decided to issue their own report instead, when the rest of the commission rejected this absurd demand. According to contemporary right-wing mythology, the financial crisis was caused by the formerly Government-sponsored entities (GSEs) Fannie Mae and Freddie Mac, the Community Reinvestment Act (CRA) of 1977 and, more broadly, liberal government policies aimed at badgering banks and other financial institutions into making home-ownership more accessible for minorities. So naturally, this is what the dissident report argues.

1) The vast majority of subprime loans -- considered to be at the heart of the mortgage-frenzy -- were originated by institutions not subject to CRA oversight. In other words, the vast majority of subprime loans were issued by financial institutions that either were not covered at all by the Community Re-investment act or were issued by financial institutions in geographical areas not covered by the CRA. These loans were made, overwhelmingly, for one reason and one reason only -- the institutions making them thought they were profitable.

And, as Barry Ritholtz points out, the potential profitability of the sub-prime market prompted financial institutions to engage in egregiously irresponsible banking practices, practices which have absolutely zero plausible relationship to federal fair housing legislation generally or the CRA in particular.

In this light, former Fed governor and well-known conservative economist Randall Kroszner has concluded that: "the very small share of all higher-priced loan originations that can reasonably be attributed to the CRA makes it hard to imagine how this law could have contributed in any meaningful way to the current subprime crisis."

2) Subprime loans, though substantial, represent a relatively small fraction of the larger value lost in the bursting housing bubble. According to journalist and former Wall Street Banker Nomi Prins: "Subprime mortgages have been blamed for the financial crisis, but we're spending more than five times more money (in Fed loans, injections, bailouts and guarantees) than the value of every subprime loan in the country combined."

So, not only is CRA not a cause of the subprime meltdown, but the subprime meltdown itself is only a relatively small part of a much larger real estate bubble whose bursting was a key reason for the current economic crisis. (For a good dissection of the mortgage feeding frenzy as it played out at the now failed Washington Mutual, see this New York Times article).


3) Sub-prime mortgages actually governed by CRA did relatively well in the financial crisis -- the rate of loan default in CRA-generated mortgages is lower than the national average. According to the CEO of the Federal Reserve Bank of San Francisco Janet Yellen, "studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households."

4) Freddie Mac and Fannie Mae were followers, not leaders........ ect.......