Clinton Library's Doc Dump Reveals CRA Fueled Subprime Bubble

[Vigilante]

Oh My! It's getting harder and harder for the subversive/democrats to blame the 2008 economic crash on Republican's!

Subprime Scandal: Newly released memos from the Clinton presidential library reveal evidence the government had a big hand in the housing crisis. The worst actors were in the White House, not on Wall Street.
During the 1990s, former Clinton aides bragged that more aggressive enforcement of the Community Reinvestment Act pressured banks to issue riskier mortgages, lending more proof the anti-redlining law fueled the crisis.

A 2012 National Bureau of Economic Research study found "that adherence to that act led to riskier lending by banks," with "a clear pattern of increased defaults for loans made by these banks in quarters around the (CRA) exam, (and) the effects are larger for loans made within CRA tracts," or low-income and minority areas.
To satisfy CRA examiners, Clinton mandated "flexible" lending by large banks. As a result, CRA-approved loans defaulted about 15% more often, the NBER found.

Exhibit A in the 7,000-page Clinton Library document dump is a 1999 memo to him from his treasury secretary, Robert Rubin.
"Public disclosure of CRA ratings, together with the changes made by the regulators under your leadership, have significantly contributed to ... financial institutions ... meeting the needs of low- and moderate-income communities and minorities," Rubin gushed. "Since 1993, the number of home mortgage loans to African Americans increased by 58%, to Hispanics by 62% and to low- and moderate-income borrowers by 38%, well above the overall market increase.
"Since 1992, nonprofit community organizations estimate that the private sector has pledged over $1 trillion in loans and investment under CRA."
Other documents reveal how the community-activist group ACORN and other organizations met with Rubin and other top Clinton aides on "improving credit availability for minorities."

Clinton's changes to the CRA let ACORN use the act's ratings to "target merging firms with less-than-stellar records and to get the banks to agree to greater community investment as a condition of regulatory approval for the merger," White House aide Ellen Seidman wrote in 1997 to Clinton chief economist Gene Sperling.
"Community groups have come to recognize how terribly powerful CRA has been as a tool for making credit available in previously underserved communities," Seidman added.

Seidman later boasted that Clinton's 1995 CRA revisions created not only the subprime mortgage market but also the subprime securities market. Of course, subprime loans and their high default rates ruined minority neighborhoods when the market crashed.
Memos also reveal how Clinton aides held repeal of the Glass-Steagall Act hostage to strengthening the CRA. They gave Republicans deregulation of banking activities in exchange for over-regulating how those banking activities applied to low-income communities.

Clinton aides viewed ending the Glass-Steagall Act as a way to "extend the CRA to Wall Street firms" and wanted to extend it to insurers, mutual funds and mortgage bankers. But due to GOP opposition, that was "not politically feasible," Rubin told Clinton in a 1997 memo.
In 2000, HUD Secretary Andrew Cuomo lit the fuse on the subprime bomb by requiring Fannie Mae and Freddie Mac to purchase subprime, CRA and other risky mortgages totaling half their portfolios.

A 1993 memo, "Racism in Home Lending," captured the tone of Clinton's affordable-housing crusade. It proposed coordinating with the Washington Post and Congressional Black Caucus on bank investigations.
These White House papers are smoking-gun evidence of Clinton's culpability in creating the subprime bubble. The mainstream media's silence is deafening.

Investor's Business Daily ^

 

[waltky]

Hangovers from the financial crisis are still lingering for many big financial firms...

These big companies had a terrible 2016
Wednesday 28th December, 2016 - It's been a tumultuous year on many fronts. In the business world, some big names have gone through particularly grueling times in 2016. Here are the ones that we think had a year they'd rather forget:

Yahoo

Yahoo started the year by axing 15% of its workforce. The struggling tech firm then admitted it had previously suffered not one but two massive data breaches, affecting more than a billion users. "Yahoo has now won the gold medal and the silver medal for the worst hacks in history," said online security consultant Hemu Nigam. The attacks have even cast doubt over Verizon's (VZ, Tech30) planned acquisition of Yahoo (YHOO, Tech30). Stock hit: Shares are down 14% from the high they reached in September before the first hack was disclosed.

Samsung

The year blew up in spectacular fashion for the South Korean electronics giant. Its problems began when it had to recall millions of Galaxy Note 7 smartphones after the high-end devices started bursting into flames. It then screwed up the recall by offering replacement Note 7 phones it said were safe but actually turned out to be prone to catching fire as well. Samsung eventually had to kill the phone off altogether, costing it billions in profits and compounding the damage to its reputation. It was also forced to recall almost 3 million washing machines because they could explode. Stock hit: Samsung (SSNLF) shares took a hit from the Note 7 debacle but have since rallied to reach a record high, helped by the company's announcement that it will consider overhauling its complicated structure.

Wells Fargo

Wells Fargo shocked Americans in September by firing 5,300 employees who had secretly created as many as 2 million unauthorized accounts. CEO John Stumpf was pilloried at congressional hearings and eventually had to step down. The bank's reputation has been sullied as former employees have come forward with horror stories about a pressure-cooker work environment that they say rewarded unethical practices. Stock hit: Wells Fargo (WFC) shares plunged more than 12% in the weeks after the phony accounts scandal erupted. But they've risen sharply following Donald Trump's victory in the U.S. presidential election.

Deutsche Bank

Hangovers from the financial crisis are still lingering for many big financial firms, and Deutsche Bank's has proved particularly painful this year. Already struggling with weak profits and demoralizing job cuts, Germany's biggest lender was hit in September by a U.S. demand for $14 billion to settle claims it packaged up toxic mortgages in the lead-up to the financial crisis. That sparked concerns among investors that Deutsche Bank -- described as the single biggest source of risk in the global banking system -- didn't have the funds to pay such a hefty bill. The worries have since eased somewhat and Deutsche Bank said last week it had reached a $7.2 billion deal with U.S. authorities over the toxic mortgage claims. Stock hit: During the worst of the fears over Deutsche Bank's (DB) finances in September, the lender's shares hit their lowest level in more than 20 years. They've rebounded significantly since then but are still down more than 20% since the start of the year.

Theranos

 

[Silent Warrior]

I had a friend in banking back in the late 90's. He was required to keep a Community Reinvestment Act folder for paperwork to be examined by the FDIC. During one examination one of his employees handed the file,instead of just the contents, to an examiner. My friend had labeled the file Community Reinvestment Act Program, but had just used the acronym CRAP. The examiner was not amused, but it shows how much insight my friend had.