15 responses

  1. Chris Engel
    March 4, 2013

    The CRA talking point is a nonsense attempt at historical revisionism by the desperate neoliberals.

    Don’t let them get away with it, keep up the good work Dr. Black.

  2. Dale Pierce
    March 4, 2013

    The link below goes to an article which makes the point that a 2009 study – by two Fed-Heads – concluded that 94 percent of the iffy loans were made by non-traditional non-banks that weren’t even covered by the CRA.

    Of course, it’s also nice to know what an utterly crappy and valueless piece of trash the new study is…


  3. Steve Koch
    March 4, 2013

    I’m still waiting for Dr. Black to discuss/explain that the “it’s all about liberals giving everything to their lazy worthless slob families and friends” (e.g. ‘the CRA excuse’) existed from the very start of the control frauds and was extremely overt and prevalent throughout the inner cultures/environments of the control frauds. Anyone who did not explicitly agree with “it’s the CRA making us do what we’re doing” was quickly dismissed from the “organization”.

    My 24-7 fox-news watching Dallas mother-in-law worked as a “final reviewer” (something like that…. she was the “last step making sure that all materials were collected and properly prepared going into a mortgage closing”) for over “twenty years”. Her and her “extremely hardworking, ethical, disgusted-with-liberal-losers” co-workers will tell you that “everyone in the organization knew for twenty years they were producing bad loans that the criminal liberal freaks like Bill and Hillary were forcing the banks to give to scum that shouldn’t have qualified for grocery store membership cards”. Further, all her “processer” friends will viciously shriek and attack at any suggestion that the bankers were anything but amazing leaders who deserve every penny they got.

    I can go much further in this regard…. I have not yet met a single person here in Texas that would disagree with her. They seem to all (98%?) violently disagree that the bankers did anything wrong. It’s the do-gooder liberal government freaks that did everything and are still destroying everything. It’s all so obvious to them… the government is out of control…. it must be stopped and taken down.

    I have not succeeded in getting anyone I know (family, friends, co-workers…. not a single person) to even pause and consider the possibility that maybe the bankers got rich (for some reason they don’t disagree with this part of the proposition) by concocting essentially “trillions” in fraudulent loans and throwing them around like candy to anyone who would sign on the bottom line. They’re all furious with the “government”…. but have absolutely no anger toward the banks.

    I was sure that back when I first starting reading William Black articles and sending them to family and friends in 2008 that we would all be relieved to have discovered the ‘truth’ and that we would all ‘rally’ behind Dr. Black and other ‘leaders’ like him. I was sure that the “Mafia Bankers” would be lynched… and all the looted wealth returned to we-the-people. Yikes…. in retrospect…. I must have been as ignorant and naive back then as Texans still are today.

    • jim
      May 5, 2013

      Yes, the prevailing culture actually has managed to convince people that it is OK for banks to steal.

      The simple fact is that when banks take money in the form of deposits in one neighborhood and make loans into another neighborhoods, they are stealing from the one and enriching the other.
      Banks get away with stealing from poor neighborhoods because society tends to sanction it (or they don’t understand that the theft is taking place). There is no doubt that banks have the power of destroy some neighborhoods and enrich others by stealing from the one and giving to the other. And it is no coincidence that bankers live in the neighborhoods being enriched.

      We don’t have economist studying the question of whether laws prohibiting burglary have adverse impacts on burglars. I’m sure the guys doing this study could put together a study that shows that
      burglar suffer increased risk and loss of income as a result of burglary laws. Is it asking too much to expect banks to not surreptitiously steal from their depositors?

  4. Daniel D
    March 4, 2013

    They wrote their findings first, then came the rest.

    Fraud in the corporate world, banking or otherwise is not rare by any stretch. Prosecution for fraud in the corporate world is what is rare.

    Fraud is much easier to disguise and hide the further it is pushed away from the corporate offices. Those people in HQ offices know what’s up, however, they also know that those below them in the food chain who are coerced, forced or otherwise into committing the liar loans, false accounting reports and otherwise are expendable. They will be hung out to dry should the house of cards fall and not the HQ staff, they will live to loot another day.

    Often there are hundreds of subsidiaries / agents / brokers who individually are not material in the eyes of the external auditors / examiners etc., as such they are generally ignored. It’s incredibly easy to not only perpetrate, but, encourage fraud at the ground level and inflate numbers. (As we should all know by now) So as an employer, be careful how you structure your incentive packages, you might just get what you asked for.


  5. joe bongiovanni
    March 4, 2013

    Thanks for this very important article at this very important time.
    The truth about the ‘messaging’ on the CRA is coming out.
    And thanks for the comments, especially the framing of the Fox News perspective by our loved ones in Texas. That is so telling.
    At some point in time back at the new market beginnings from the deregulation of banking and finance, somebody told someone doing the paper on MBSs that the reason the ‘fraudulent’ loans were being made was to meet the requirements of the CRA. And now everyone knows its true.
    Who was that somebody?
    And how far removed from Adelson?

  6. Enslavedlikeme
    March 5, 2013

    Thank you Dr. Black.

    Does anyone know if there are any firms successfully prosecuting the loan originators, brokers and correspondent lenders ? Please include evidence so as to avoid chasing rabbits. -Thanks-

  7. Janneke Ratcliffe
    March 5, 2013

    Thank for this in depth review of the paper in question. Please see another paper critiquing the same study. http://www.ccc.unc.edu/documents/DebunkingCRAMyth.pdf. In summary, we are concerned that the analysis largely examines the wrong loans with respect to timing, and that the analyses do not support the conclusion of the paper well. The review was contributed to by a former regulator and former CRA lending officer for a major financial institution.

  8. davidgmills
    March 5, 2013

    But they got away with this scam, because there have been no prosecutions. And the mythology will continue to be the prevailing view because no one got prosecuted.

    As a retired lawyer (civil litigator for nearly 35 years representing individuals and small business), I am so disgusted with the entire justice system — both criminal and civil. I retired a few years early at 62 because I just could not take it any more. When you are on the inside, and you see what a rigged game the system is, from the politicians, to the prosecutors, to the judicial decisions, to the power of the corporate lobby and financial institutions to somehow obtain the results the oligarchy wants, there comes a point when you just have to say this is not worth the effort.

    While I admire Bill Black for keeping up the effort, at this point it seems like tilting at windmills.

    It is going to take an effort by the people and so far they just seem clueless as to what to do.

  9. Dismayed
    March 6, 2013

    It’s amazing that the CRA inflated housing bubbles in Spain and Ireland, too. Maybe conservatives can explain the mechanism.

  10. Charles Clark
    March 31, 2013

    I was doing research on CRA around 2004 and the evidence then was that CRA loans had a lower default rate that regular loans. Banks (and I spoke to some CRA officers) work harder on these loans to make them less risky, working with the clients, being extra helpful. The exact opposite of the fraudulent sub prime that dominated the housing bubble. At every event I spoke at after the crash (economic crisis is good for economist speaking invitations) I had at least one CRA blamer and I always look forward to it, as it was so easy to dispute. Keep up the good work Prof. Black.

  11. jim
    May 5, 2013

    It is a shame there is so little focus on what CRA is intended to do. CRA is intended to limit the
    amount of veiled theft by bankers on low-income communities. If a banker is allowed to take
    deposits from one community and funnel the loans into another community that amounts to disguised form of theft, if the community that benefits is the one where the banker and his country club buddies live. Ironically, CRA is portrayed by the media as redistribution from the wealthy to the poor when in fact it is just feeble attempt to prevent redistribution from the poor to the wealthy.
    In order for a bank operating in a low income community to get a satisfactory CRA rating all it has to do is make 50% of its loans inside the community that supplies the deposits. In other words, its OK to steal half the money, but not all of it. As long as banks only redistribute wealth from the poor to the wealthy at a rate of no more than 50% that is considered acceptable.

    It sounds to me that the study cherry-picked a handful of the largest banks and compared them to banks in general and found that they were gaming the system. From what I can tell at the time of the study there were only about 25 banks with assets over $50 billion. No big surprise that they were found to be gaming the system. And yet the study tarnishes the reputation of the other 10 thousand deposit taking institutions.

    The bottom line is this: There needs to be a law that prevents banks from taking money in deposits
    from low-income neighborhoods and funneling the money in the form of loans to wealthy neighborhoods. To allow that is to allow theft. We don’t ask if the burglar might operate more profitably if he is allowed to commit burglary and we shouldn’t be asking if banks are become less profitable if they aren’t allowed to steal from poor neighborhoods. The banks and the burglars are just going to have to figure out how to make a living without theft or suffer the consequences.

  12. Chris
    October 26, 2013

    When the CRA was created back in the 1970s about 75% of all mortgages originated from institutions which must comply with the CRA. By the time the crisis began that number had shrank to about 25% largely because of the growth of independent mortgage companies which are not subject to the CRA. This statistic really underscores how absurd the whole blame the CRA argument really is.

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