{"id":12632,"date":"2012-10-09T12:55:03","date_gmt":"2012-10-09T17:55:03","guid":{"rendered":"http:\/\/ssgreenberg.name\/PoliticsBlog\/?p=12632"},"modified":"2012-10-09T12:56:38","modified_gmt":"2012-10-09T17:56:38","slug":"did-bill-clinton-encourage-banks-to-make-bad-home-loans","status":"publish","type":"post","link":"https:\/\/ssgreenberg.name\/PoliticsBlog\/2012\/10\/09\/did-bill-clinton-encourage-banks-to-make-bad-home-loans\/","title":{"rendered":"Did Bill Clinton Encourage Banks to Make Bad Home Loans?"},"content":{"rendered":"

The video from YouTube<\/em>, Why Obama Now<\/strong><\/a>, in my previous post The Barack Obama Who Can Explain It All<\/strong><\/a>, has engendered a lot of discussion.<\/p>\n

One poster made the claim:<\/p>\n

CLINTON DEREGULATED THE BANKS AND MADE THEM GIVE THOSE BAD MORTAGES TO THE PEOPLE WHO COULD NOT AFFORD THEM<\/p><\/blockquote>\n

I’d turn down the volume of the above quote, but then it would not have been faithful to the tone of the person who made the comment.\u00a0 I had been arguing from memory that this was not true, but I decided to do a little research to enforce my point of view.<\/p>\n

My research took me to the WikiPedia article on The Community Reinvestment Act<\/strong><\/a>.<\/p>\n

\n

The Community Reinvestment Act<\/b> (CRA<\/b>, Pub.L.<\/a> 95-128, title VIII of the Housing and Community Development Act of 1977<\/a>, 91 Stat.<\/a> 1147, 12 U.S.C.<\/a> \u00a7 2901<\/a> et seq.<\/i>) is a United States federal law<\/a> designed to encourage commercial banks<\/a> and savings associations<\/a> to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.[<\/span>1]<\/span><\/a><\/sup>[<\/span>2]<\/span><\/a><\/sup>[<\/span>3]<\/span><\/a><\/sup> Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining<\/a>.[<\/span>4]<\/span><\/a><\/sup>[<\/span>5]<\/span><\/a><\/sup><\/p>\n

The Act instructs the appropriate federal financial supervisory agencies to encourage regulated financial institutions to help meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation (Section 802.<\/a>) To enforce the statute, federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches<\/a> or for mergers or acquisitions<\/a> (Section 804.<\/a>)[<\/span>6]<\/span><\/a><\/sup><\/p>\n

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In July 1993, President Bill Clinton<\/a> asked regulators to reform the CRA in order to make examinations more consistent, clarify performance standards, and reduce cost and compliance burden.[<\/span>51]<\/span><\/a><\/sup> Robert Rubin, the Assistant to the President for Economic Policy, under President Clinton, explained that this was in line with President Clinton’s strategy to “deal with the problems of the inner city and distressed rural communities”. Discussing the reasons for the Clinton administration’s proposal to strengthen the CRA and further reduce red-lining, Lloyd Bentsen<\/a>, Secretary of the Treasury at that time, affirmed his belief that availability of credit should not depend on where a person lives, “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 said that the proposed changes would “make it easier for lenders to show how they’re complying with the Community Reinvestment Act”, and “cut back a lot of the paperwork and the cost on small business loans”.[<\/span>36]<\/span><\/a><\/sup><\/p>\n<\/blockquote>\n

Can you interpret Lloyd Bentsen’s remark, “The only thing that ought to matter on a loan application is whether or not you can pay it back, not where you live”, in a way that encourages banks to make bad loans?<\/p>\n

No the banks are the ones who figured out, on their own, how to make money from loans that could not be paid back.<\/p>\n

If you read the WikiPedia article there are a lot more details of the history of changes to the act. I encourage you to read the whole thing, because what I have quoted is just the part that proves my point.<\/p>\n","protected":false},"excerpt":{"rendered":"

The video from YouTube, Why Obama Now, in my previous post The Barack Obama Who Can Explain It All, has engendered a lot of discussion. One poster made the claim: CLINTON DEREGULATED THE BANKS AND MADE THEM GIVE THOSE BAD MORTAGES TO THE PEOPLE WHO COULD NOT AFFORD THEM I’d turn down the volume of […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[166],"tags":[],"class_list":{"0":"post-12632","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-stevegsposts","7":"czr-hentry"},"_links":{"self":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/12632","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/comments?post=12632"}],"version-history":[{"count":3,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/12632\/revisions"}],"predecessor-version":[{"id":12635,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/12632\/revisions\/12635"}],"wp:attachment":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/media?parent=12632"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/categories?post=12632"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/tags?post=12632"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}