When will the US financial baillout occur?

[Steve]

Sounds like trouble to me. Jimmy Carter enacted the CRA to service low income neighborhoods. Interference with the markets' date=' such as trying to provide homeownership to everyone, leads to the banks getting clogged up with these mortgages, or MBSs derived from them. The groups named above are very political and use the money they receive to get a death grip on a block of Congressmen and the existence of both the Congressmen and the groups becomes perpetual. Even in this crisis environment, you will hear them talking about the need to build more affordable housing which is nuts considering the bloated housing inventory.

 

A government on a social mission can be a big factor in precipitating problems in the market.[/quote']

Show me where any law requires any bank to make a bad business decision and give a loan to an unqualified borrower.

 

The CRA simply made banks consider applications from qualified borrowers in undesirable neighborhoods. Low income folks in the ghetto, employed, still want a home too. And some can pay for it (if they can't then no one told the banks to give them money). That property is worth *something*, but not enough for the banks to mess with. The CRA forced them to do so. That's it.

 

Cheers,

SD

 

What prompted the act was evidence showing that applicants with the SAME criteria from low income neighborhoods were denied loans that were granted to others in other areas.

 

What should be the remedy?

 

 

[Steve]

At the risk of having too many financial crisis related threads, I'll include this bit of news here as well.

 

Now its your credit cards that are gonna get hit.

 

AmEx rates credit risk by where you live, shop

 

...Among other criteria, cardholders are seeing limits reduced because of where they live, where they shop and who holds their mortgage...

 

and this is disturbing as well.

 

MORTGAGE MELTDOWN TO HIT CREDIT CARD USERS

 

Because of card agreements, credit card issuers cannot simply close accounts and demand full payment. But they can do the next best thing: Raise the cardholder's interest rate. They can also lower credit limits repeatedly to prevent a consumer from making any new purchases. That's effectively the same thing as closing the account.

 

Lower limits can hurt consumers in myriad ways. Consumers with a balance thatâ??s over the limit -- even if that occurs as a direct result of a shrunken credit limit -- face over-limit fees and can see their interest rate raised to the "default" rate of 32 percent or more. Lower limits also hurt credit scores. Credit utilization is a key component of credit scores, accounting for about one-third of the magic formula that generates that score. Consumers who carry a credit card balance thatâ??s more than 30 percent of their credit limit are punished by the credit score formula, Hardekopf said...

 

[chuckwoww]

So something good has come out of this mess. Maybe people (some people) will start being more careful with their plastic.

[Bangkoktraveler]

At the risk of having too many financial crisis related threads, I'll include this bit of news here as well.

 

Now its your credit cards that are gonna get hit.

 

AmEx rates credit risk by where you live, shop

 

...Among other criteria, cardholders are seeing limits reduced because of where they live, where they shop and who holds their mortgage...

 

and this is disturbing as well.

 

MORTGAGE MELTDOWN TO HIT CREDIT CARD USERS

 

Because of card agreements, credit card issuers cannot simply close accounts and demand full payment. But they can do the next best thing: Raise the cardholder's interest rate. They can also lower credit limits repeatedly to prevent a consumer from making any new purchases. That's effectively the same thing as closing the account.

 

Lower limits can hurt consumers in myriad ways. Consumers with a balance thatâ??s over the limit -- even if that occurs as a direct result of a shrunken credit limit -- face over-limit fees and can see their interest rate raised to the "default" rate of 32 percent or more. Lower limits also hurt credit scores. Credit utilization is a key component of credit scores, accounting for about one-third of the magic formula that generates that score. Consumers who carry a credit card balance thatâ??s more than 30 percent of their credit limit are punished by the credit score formula, Hardekopf said...

 

 

Credit card companies, mortgage loan holders and auto loan loan holders all seem to be playing games.

 

CREDIT CARD COMPANIES

Some people have already had their lines of credit terminated for no aparent reason. Some card companies have changed due dates, causing some card holders who pay electronically on a set date, to pay late. When this happens, the card company increase interest rates and attaches late fees etc.

 

 

LOAN HOLDERS and AUTO LOAN HOLDERS

Loan holders are demanding early payment in some cases. If they can get the money earlier, they will. The grace periods are not necessarily honored.

 

 

[rogueyam]

I agree with this but Obama' date=' ACORN, and chocolat steve say that this approach is all racis' an' shit.[/quote']

You posted a link to a politically biased site. Where is the proof that banks were forced to make bad loans? I have posted proof of predatory lending. I have posted stats about subprime loans offered to high income applicants.

 

These banks may in fact have been forced to but I haven't seen the stats as yet.

 

There is statistics that suggest that QUALIFIED homeowners in certain areas were NOT offered loans but their counterparts in other areas were. I have seen that the government asked these banks to offer the SAME loans to applicannts in all areas.

 

There is a supposition that by telling the banks to treat all lenders the same, then to some, by definition that if the lender is poor or of a certain group then the loan is 'bad loan'.

 

I see a lot of links to right wing talking heads who say this was happening but I don't see any independent documentation to support it.

 

Again, maybe there are. You're better at googling than I am.

 

I'm better at a number of things than you are.

 

If you genuinely want to understand why the credit crunch was caused by deliberate, socialistic government actions (and, of course, I doubt you do) then there is an excellent compendium of articles on the subject here.

 

And, by the way, that "politically biased site" whine makes you look like a punk. Some people happen to understand economics. Get over it already.

[mongon]

Barney plays the race card rather than admit any fault. The You Tube link I posted somewhere else shows him denying that FF have a problem. The unaccountability of Congressman is extraordinary.

 

AP

Oct 6, 2008

Frank says GOP housing attacks racially motivated

By GLEN JOHNSON â?? 17 hours ago

 

BOSTON (AP) â?? Rep. Barney Frank said Monday that Republican criticism of Democrats over the nation's housing crisis is a veiled attack on the poor that's racially motivated.

 

The Massachusetts Democrat, chairman of the House Financial Services Committee, said the GOP is appealing to its base by blaming the country's mortgage foreclosure problem on efforts to expand affordable housing through the Community Reinvestment Act.

 

He said that blame is misplaced, because those loans are issued by regulated institutions, while far more foreclosures were triggered by high-cost loans made by unregulated entities.

 

"They get to take things out on poor people," Frank said at a mortgage foreclosure symposium in Boston. "Let's be honest: The fact that some of the poor people are black doesn't hurt them either, from their standpoint. This is an effort, I believe, to appeal to a kind of anger in people."

 

Frank also dismissed charges the Democrats failed on their own or blocked Republican efforts to rein in the mortgage companies Fannie Mae and Freddie Mac. The federal government recently took control of both entities.

 

House Minority Leader John Boehner of Ohio called Frank's remarks "a lame, desperate attempt to divert Americans' attention away from the Democratic party's obstruction of reforms that would have reined in Fannie Mae and Freddie Mac and helped our nation avoid this economic crisis."

 

"Congressman Frank should retract his ridiculous statements and start taking responsibility for the role he and other top Democrats played in putting Main Street Americans in this mess," Boehner said.

 

Frank said Republicans controlled Congress for 12 years and passed no regulation, while Democrats passed a Bush administration Fannie and Freddie regulation package since gaining control of the House and Senate in January 2007.

 

"If I could have stopped a Republican bill during the Bush years, I would have started with the war in Iraq. Then I would have gone to the Patriot Act. Then I would have gone on to the hundreds of millions in tax cuts," said Frank, to applause from the audience.

 

The longtime congressman is being challenged this fall by both Republican and independent candidates. He has been criticized in his liberal district for being one of the leaders of congressional efforts last week to win approval of a $700 billion Wall Street bailout plan.

 

 

[Bangkoktraveler]

I agree with this but Obama' date=' ACORN, and chocolat steve say that this approach is all racis' an' shit.[/quote']

You posted a link to a politically biased site. Where is the proof that banks were forced to make bad loans? I have posted proof of predatory lending. I have posted stats about subprime loans offered to high income applicants.

 

These banks may in fact have been forced to but I haven't seen the stats as yet.

 

There is statistics that suggest that QUALIFIED homeowners in certain areas were NOT offered loans but their counterparts in other areas were. I have seen that the government asked these banks to offer the SAME loans to applicannts in all areas.

 

There is a supposition that by telling the banks to treat all lenders the same, then to some, by definition that if the lender is poor or of a certain group then the loan is 'bad loan'.

 

I see a lot of links to right wing talking heads who say this was happening but I don't see any independent documentation to support it.

 

Again, maybe there are. You're better at googling than I am.

 

[color:red]I'm better at a number of things than you are.[/color]

 

If you genuinely want to understand why the credit crunch was caused by deliberate, socialistic government actions (and, of course, I doubt you do) then there is an excellent compendium of articles on the subject here.

 

And, by the way, that "politically biased site" whine makes you look like a punk. Some people happen to understand economics. Get over it already.

 

 

 

Gee, Professor rogie has spoken!

[color:red]rogie, can you PLEASE provide us with your credentials.[/color]

 

[rogueyam]

rogie, can you PLEASE provide us with your credentials.

 

The proof of the pudding is in the eating.

[kamui]

So something good has come out of this mess. Maybe people (some people) will start being more careful with their plastic.

 

This problem is known since years. And the knowledge about it was available even for Joe-Six-Pack and Hockeymoms.

 

I few months ago I read Dave Ramsey: The Total Money Makeover whose mantra is: repay your debts as soon as possible and don't take *any* new loans...

Which of course means to reduce spending, drive smaller cars, e.g..

 

 

Ramsey's plan is quite simple, but very hard to follow since it is against everything Americans were told in the recent decades (consumption makes you happy and more worthy, buy now think later, e.g.)

[Bangkoktraveler]

rogie' date=' can you [b']PLEASE[/b] provide us with your credentials.

 

The proof of the pudding is in the eating.

 

 

 

 

Just as I thought, you don't have any credentials.