The Big Lie

[WiffenPoof]

I know that there are many people here that are well aware of how we (and the world) ended up in the financial mess we are in. However, many of us are still trying to understand the complexity behind the downfall and why it happened.

I was listening to Thom Hartmann this morning and he gave about as concise an explanation as I have heard. I really hope that someone can post his explanation because it made the whole mess so much more understandable. I will say this...We all need to educate ourselves on the following:

Glass Steigal (sp)
The Bear Sterns Exemption Act
The Community Reinvestment Act

Particularly interesting is the big lie that the Right continues to put out there that banks were "forced" to give loans to low income families that could not afford them. The reality is that the only thing that banks were forced to do was not discriminate based on zip codes.

There is so much more. I hope that someone here can lay out in the most basic terms how we ended up here.

I read a post here that I thought was so well written on the subject. I wish I had kept a copy.

Thanks...

-P

[RUMMYisFROSTED]

1. One of the many big ones.

[pkdu]

2. From further down the "Latest GD" ....good summary in WaPo

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x2271810

[dawg]

3. When they began blaming the CRA, I just could not believe it ....

They were literally claiming this whole mess was caused by the Democrats forcing the banks to lend to a bunch of lazy n*ggers. Make no mistake - that is what they mean when they try to blame this on the CRA.

Racist. Racist. Racist.

And stupid.

The CRA has been around since at least the Carter Administration. You would think it would have caused trouble before now. :P

No.

The CRA had nothing to do with the crash. And although some may argue with me, neither did Fannie and Freddie. They were followers in this - nothing more.

Wall Street and the big banks went off the rails. But I don't blame them either.

It is the government's responsibility to regulate, and the government failed to do it's job. Thanks to good old-fashioned conservative economic principles. Just like they had in the 1920's.

[sinkingfeeling]

4. I disagree that the Community Reinvestment Act had much to do with it, although it's the #1 RW

talking point. Here is a write up at the time of the crisis, Jan. 7, 2008, that pretty much blows that argument away. It's title is: Community Reinvestment Act May Have Deterred Risky Mortgage Lending


http://www.reuters.com/article/2008/01/07/idUS135259+07-Jan-2008+BW20080107

"Compared to other lenders in their communities, banks making loans
in their CRA assessment areas (CRA Banks) were less likely to make a
high cost loan, charged less for the high cost loans they did make,
and were substantially more likely to eschew the secondary market and
retain high cost and other loans in portfolio. Foreclosure rates were
also lower in metropolitan areas with proportionately greater numbers
of bank branches."

"Without the CRA, the foreclosure crisis might have negatively
impacted even more borrowers and neighborhoods," stated law firm
partner Warren Traiger. "Apparently, the CRA's mandate that banks help
serve the credit needs of their local communities consistent with safe
and sound banking practices has resulted in CRA Banks making a greater
proportion of safe and sound loans than other lenders."

-- CRA Banks were 66 percent less likely than other lenders to
originate a high cost loan;

-- CRA Banks were more than twice as likely as other lenders to
hold originated loans in their portfolio;

I think the points in this thread are more precise.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x2271810

[WiffenPoof]

5. Thanks....

Your responses are making it even clearer in my head.

-P

[dtexdem]

6. Accomplished through many smaller lies ...

and much lying and distortion by the media.