We should all agree with this!

[Dad2three]

Yes. We need to further empower regulators who can't back up their email.
Regulators who push banks to lend to poor risks.

Loans that were under government regulation did better than private loans, especially if they were regulated by the "Community Reinvestment Act."




Center for Public Integrity reported in 2011, mortgages financed by Wall Street from 2001 to 2008 were 4½ times more likely to be seriously delinquent than mortgages backed by Fannie and Freddie.

Loans that were under government regulation did better than private loans

Loans that were made to people with good credit did better than those made to people with bad credit.

Good you agree, Wall street loans performed 450%-600% worse than Gov't backed loans!

 

[Dad2three]

Yes. We need to further empower regulators who can't back up their email.
Regulators who push banks to lend to poor risks.

Regulators and policymakers enabled this process at virtually every turn. Part of the reason they failed to understand the housing bubble was willful ignorance: they bought into the argument that the market would equilibrate itself. In particular, financial actors and regulatory officials both believed that secondary and tertiary markets could effectively control risk through pricing.


http://www.tobinproject.org/sites/tobinproject.org/files/assets/Fligstein_Catalyst of Disaster_0.pdf



“When regulators don’t believe in regulation and don’t get what is going on at the companies they oversee, there can be no major white-collar crime prosecutions,”...“If they don’t understand what we call collective embezzlement, where people are literally looting their own firms, then it’s impossible to bring cases.”

http://www.nytimes.com/2011/04/14/business/14prosecute.html?pagewanted=all

The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence.
'
William K. Black: The Two Documents Everyone Should Read to Better Understand the Crisis

Dubya was warned by the FBI of an "epidemic" of mortgage fraud in 2004. He gave them less resources.

FBI saw threat of loan crisis - Los Angeles Times

Shockingly, the FBI clearly makes the case for the need to combat mortgage fraud in 2005, the height of the housing crisis:

Financial Crimes Report to the Public 2005

FBI ? Financial Crimes Report 2005

The Bush Rubber Stamp Congress ignored the obvious and extremely detailed and well reported crime spree by the FBI.

THE BUSH ADMINISTRATION and CONGRESS stripped the White Collar Crime divisions of money and manpower.

http://www.nytimes.com/2008/10/19/washington/19fbi.html?pagewanted=all

Regulators and policymakers enabled this process at virtually every turn.

I know. Bankers wouldn't have made those loans without government insistence.

WORLD WIDE CREDIT BUBBLE AND BUST? Commercial R/E bubble and Subprime auto loan at the same time of Dubya's subprime bubble happening? lol

Jun 16, 2005

The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops

The global housing boom: In come the waves | The Economist

 

[Toddsterpatriot]

Glass-Steagall enforced bank diversity, we had investment banks on one side of the firewall and depository institutions on the other. When Glass-Steagall was repealed, the mega-banks started engaging in both types of banking. It's akin to a virus (the mega-banks) infecting the host (the financial system).

nice try but it was always illegal to fix funds between depository and investment bank so it had nothing to do with crisis.

Oy vey....

The largest banks owning and trading risky securities in the first place is what got them into trouble.

We've now seen a huge amount of activity move from banks to the capital markets. And due to a multitude of factors (network effects, high barriers to entry and deregulation which let these large institutions traverse products and global markets) we have capital markets run by a small number of institutions. And these institutions have become too-big-too-fail by the roles deregulation have enabled them to obtain, not just the magnitude of their size.

The financial sector has become so leveraged and concentrated that it's prone to failure. I do agree that simply separating investment and commercial banking is not enough. We have to do do something to stop the insane risk taking by the major players in the capital markets. Network effects in trading are incredibly powerful, and left alone to their own devices, the propensity is for more consolidation being the norm and not the exception. It would take much more government intervention via legislation (barriers between products, Tobin taxes, geographical barriers in markets, etc). It requires more than restructuring of the financial sector, the factors which create concentration need to removed from the equation.

The 800 pound gorilla in the room is derivatives. The big players have OTC derivatives exposure that borders on comical if it wasn't so serious and catastrophic. You need a MASSIVE balance sheet to to make OTC derivatives cost effective. The books are huge and most exposure is hedged in a nutty and pyramid like structure.


[MENTION=2926]Toro[/MENTION]

The largest banks owning and trading risky securities in the first place is what got them into trouble.

I know, all those mortgages. Just awful.
Mortgages that weren't prevented by Glass Steagall.

Tobin taxes

One of the dumber liberal ideas. Ever.
More proof, not that it's needed, that liberals don't understand markets.

 

[Dad2three]

No one pushed the banks to make bad loans. The banks lobbied Congress to repeal the restriction of Glass-Steagall on proprietary trading, and the government failed to exercise proper regulatory oversight of the sale of mortgage-backed securities. Prior to Gramm-Leach-Bliley, the banks operated under warehouse loan agreements in which the mortgages were pledged as security, and the banks retained ownership of the pledged mortgages. Once the restrictions on trading were repealed, the warehouse loans were replaced repurchase agreements in which the mortgage-backed securities were sold to the repo counterparty with the bank putting up cash collateral. When the mortgages starting going into default in 2006, this triggered the repo contracts that required the banks to buy back the nonperforming mortgages, leaving the banks with insufficient capital to meet obligations. Ironically, the purpose of the repurchase agreements was to provide liquidity and avoid risk of systemic failure; however it did not work in 2008 because in the hands of the bank a nonperforming mortgage is an illiquid asset. In this regard, there is nothing wrong with subprime loans per se. Virtually every VA and FHA loan is subprime. The same is true with commercial loans guaranteed by the SBA. These loans are not a problem provided that they are made with proper due diligence for collateralization and retained and serviced in house by the bank. The problem was the unregulated wholesale marketing of them as debt securities.

No one pushed the banks to make bad loans.

Baloney. I remember clowns protesting banks here in Chicago for not making enough loans to people with sketchy credit. One of those clowns is the whiner in the White House.

Prior to Gramm-Leach-Bliley, the banks operated under warehouse loan agreements in which the mortgages were pledged as security, and the banks retained ownership of the pledged mortgages.

Banks sold mortgages under Glass Steagall.
MBS existed under Glass Steagall.

Baloney. I remember clowns protesting banks here in Chicago for not making enough loans to people with sketchy credit. One of those clowns is the whiner in the White House.

OH YOU MEAN REDLINING, THAT THING THAT'S ILLEGAL!


It is clear to anyone who has studied the financial crisis of 2008 that the private sector’s drive for short-term profit was behind it.


...The nonbank underwriters made more than 12 million subprime mortgages with a value of nearly $2 trillion. The lenders who made these were exempt from federal regulations.




Lest We Forget: Why We Had A Financial Crisis - Forbes

 

[Toddsterpatriot]

Loans that were under government regulation did better than private loans, especially if they were regulated by the "Community Reinvestment Act."




Center for Public Integrity reported in 2011, mortgages financed by Wall Street from 2001 to 2008 were 4½ times more likely to be seriously delinquent than mortgages backed by Fannie and Freddie.

Loans that were under government regulation did better than private loans

Loans that were made to people with good credit did better than those made to people with bad credit.

Good you agree, Wall street loans performed 450%-600% worse than Gov't backed loans!

Government backed loans are backed by the taxpayer.

The bond holder does great.

The backer of the bond, not as well.

Just wait until we add up the student loan losses due to "Gov't backed loans!"

 

[Toddsterpatriot]

No one pushed the banks to make bad loans. The banks lobbied Congress to repeal the restriction of Glass-Steagall on proprietary trading, and the government failed to exercise proper regulatory oversight of the sale of mortgage-backed securities. Prior to Gramm-Leach-Bliley, the banks operated under warehouse loan agreements in which the mortgages were pledged as security, and the banks retained ownership of the pledged mortgages. Once the restrictions on trading were repealed, the warehouse loans were replaced repurchase agreements in which the mortgage-backed securities were sold to the repo counterparty with the bank putting up cash collateral. When the mortgages starting going into default in 2006, this triggered the repo contracts that required the banks to buy back the nonperforming mortgages, leaving the banks with insufficient capital to meet obligations. Ironically, the purpose of the repurchase agreements was to provide liquidity and avoid risk of systemic failure; however it did not work in 2008 because in the hands of the bank a nonperforming mortgage is an illiquid asset. In this regard, there is nothing wrong with subprime loans per se. Virtually every VA and FHA loan is subprime. The same is true with commercial loans guaranteed by the SBA. These loans are not a problem provided that they are made with proper due diligence for collateralization and retained and serviced in house by the bank. The problem was the unregulated wholesale marketing of them as debt securities.

No one pushed the banks to make bad loans.

Baloney. I remember clowns protesting banks here in Chicago for not making enough loans to people with sketchy credit. One of those clowns is the whiner in the White House.

Prior to Gramm-Leach-Bliley, the banks operated under warehouse loan agreements in which the mortgages were pledged as security, and the banks retained ownership of the pledged mortgages.

Banks sold mortgages under Glass Steagall.
MBS existed under Glass Steagall.

Baloney. I remember clowns protesting banks here in Chicago for not making enough loans to people with sketchy credit. One of those clowns is the whiner in the White House.

OH YOU MEAN REDLINING, THAT THING THAT'S ILLEGAL!


It is clear to anyone who has studied the financial crisis of 2008 that the private sector’s drive for short-term profit was behind it.


...The nonbank underwriters made more than 12 million subprime mortgages with a value of nearly $2 trillion. The lenders who made these were exempt from federal regulations.




Lest We Forget: Why We Had A Financial Crisis - Forbes

OH YOU MEAN REDLINING, THAT THING THAT'S ILLEGAL!

I know, telling poor risks that you won't lend to them gets the poverty pimps all in a tizzy.

The nonbank underwriters

Ummm....we're talking about Glass-Steagall. That means we're talking about banks.
Try to stay on topic.

 

[Dad2three]

No one pushed the banks to make bad loans. The banks lobbied Congress to repeal the restriction of Glass-Steagall on proprietary trading, and the government failed to exercise proper regulatory oversight of the sale of mortgage-backed securities. Prior to Gramm-Leach-Bliley, the banks operated under warehouse loan agreements in which the mortgages were pledged as security, and the banks retained ownership of the pledged mortgages. Once the restrictions on trading were repealed, the warehouse loans were replaced repurchase agreements in which the mortgage-backed securities were sold to the repo counterparty with the bank putting up cash collateral. When the mortgages starting going into default in 2006, this triggered the repo contracts that required the banks to buy back the nonperforming mortgages, leaving the banks with insufficient capital to meet obligations. Ironically, the purpose of the repurchase agreements was to provide liquidity and avoid risk of systemic failure; however it did not work in 2008 because in the hands of the bank a nonperforming mortgage is an illiquid asset. In this regard, there is nothing wrong with subprime loans per se. Virtually every VA and FHA loan is subprime. The same is true with commercial loans guaranteed by the SBA. These loans are not a problem provided that they are made with proper due diligence for collateralization and retained and serviced in house by the bank. The problem was the unregulated wholesale marketing of them as debt securities.

No one pushed the banks to make bad loans.

Baloney. I remember clowns protesting banks here in Chicago for not making enough loans to people with sketchy credit. One of those clowns is the whiner in the White House.

Prior to Gramm-Leach-Bliley, the banks operated under warehouse loan agreements in which the mortgages were pledged as security, and the banks retained ownership of the pledged mortgages.

Banks sold mortgages under Glass Steagall.
MBS existed under Glass Steagall.

The historical "originate and hold" mortgage model was replaced with the "originate and distribute" model. Incentives were such that you could get paid just to originate and sell the mortgages down the pipeline, passing the risk along



Out of Control Financial Innovation


By now the litany is familiar: the old model of banking, in which banks held on to the loans they made, was replaced by the new practice of originate-and-distribute. Mortgage originators—which in many cases had no traditional banking business—made loans to buy houses, then quickly sold those loans off to other firms. These firms then repackaged those loans by pooling them, then selling shares of these pools of securities; and rating agencies were willing to label the resulting product chicken—that is, to bestow their seal of approval, the AAA rating, on the more senior of these securities, those that had first claim on interest and principal repayment.

Everyone ignored both the risks posed by a general housing bust and the degradation of underwriting standards as the bubble inflated (that ignorance was no doubt assisted by the huge amounts of money being made). When the bust came, much of that AAA paper turned out to be worth just pennies on the dollar.




The Slump Goes On: Why? by Paul Krugman and Robin Wells | The New York Review of Books

 

[Kimura]

It's repeal helped banks to diversify.

If you define diversification as extreme leverage and exposure then you're right.

Which banks got in trouble because of securities trading? Or derivatives?

Lehman.

Then we had AIG, Washington Mutual, Ambac, Fannie Mac and Fannie Mae. The institutions all failed due to derivatives exposure. If they weren't bailed out, they wouldn't be around today.

 

[Dad2three]

No one pushed the banks to make bad loans.

Baloney. I remember clowns protesting banks here in Chicago for not making enough loans to people with sketchy credit. One of those clowns is the whiner in the White House.

Prior to Gramm-Leach-Bliley, the banks operated under warehouse loan agreements in which the mortgages were pledged as security, and the banks retained ownership of the pledged mortgages.

Banks sold mortgages under Glass Steagall.
MBS existed under Glass Steagall.

Baloney. I remember clowns protesting banks here in Chicago for not making enough loans to people with sketchy credit. One of those clowns is the whiner in the White House.

OH YOU MEAN REDLINING, THAT THING THAT'S ILLEGAL!


It is clear to anyone who has studied the financial crisis of 2008 that the private sector’s drive for short-term profit was behind it.


...The nonbank underwriters made more than 12 million subprime mortgages with a value of nearly $2 trillion. The lenders who made these were exempt from federal regulations.




Lest We Forget: Why We Had A Financial Crisis - Forbes

OH YOU MEAN REDLINING, THAT THING THAT'S ILLEGAL!

I know, telling poor risks that you won't lend to them gets the poverty pimps all in a tizzy.

The nonbank underwriters

Ummm....we're talking about Glass-Steagall. That means we're talking about banks.
Try to stay on topic.

There was no requirement in the Community Reinvestment Act that required banks to lend to marginal borrowers, just encouragement to try to lend to weaker borrowers in areas where the banks opened branches.

Further, most all sub-prime loans were not done by banks. They were done by “non-bank” lenders which were not covered by the CRA.




The common factor is an explosion in “funny” mortgage products and low interest loans, that had no connection to the actual risk of the loan. This allowed people to purchase more house than ever before, and drove a bubble. The reason you could detach the risk from availability of loans was that they found a way to hide the actual risk from the end purchasers of the loans. Furthermore, they found a way to insulate the people who could and should have known about the risks, from the consequences of the risk (yet those people still harvested the upside with little or no exposure to the downside). In most cases it was an adoption of the failed ideology of “markets can take care of themselves” that allowed these absurd situations to develop without regulators or politicians stopping them.

 

[Dad2three]

Loans that were under government regulation did better than private loans

Loans that were made to people with good credit did better than those made to people with bad credit.

Good you agree, Wall street loans performed 450%-600% worse than Gov't backed loans!

Government backed loans are backed by the taxpayer.

The bond holder does great.

The backer of the bond, not as well.

Just wait until we add up the student loan losses due to "Gov't backed loans!"

Good you agree, Gov't backed loans (meeting the Gov't underwriting standards, the one the private markets collapsed 2004-2007) did MUCH better ,450%-600% better and if NOT for the private markets going nuts, allowed by Dubya, Gov't loans wouldn't had collapsed at all!

 

[Kimura]

I know, all those mortgages. Just awful.
Mortgages that weren't prevented by Glass Steagall.

Mortgages were one part of the equation, how they were securitized is another, as were derivatives and credit default swaps.

One of the dumber liberal ideas. Ever.
More proof, not that it's needed, that liberals don't understand markets.

LOL, that precious considering I work on Wall Street.

A Tobin tax is simply a sin tax for speculation. It will discourage the practice.

Also, transaction costs have become so cheap that the total ratio of real-economic activity to trading have become all out of whack. A perfect example is high frequency trading, where speculators can increase liquidity when it's not even needed or required, and removing it in a destabilizing way is how we get into trouble.

 

[EdwardBaiamonte]

There was no requirement in the Community Reinvestment Act that required banks to lend to marginal borrowers, just encouragement to try to lend to weaker borrowers in areas where the banks opened branches.

of course thats a lie. There would have been no point unless it had teeth!!

The CRA requires that each depository institution's record in helping meet the credit needs of its entire community be evaluated by the appropriate Federal financial supervisory agency periodically. Members of the public may submit comments on a bank’s performance. Comments will be taken into consideration during the next CRA examination. A bank's CRA performance record is taken into account in considering an institution's application for deposit facilities

 

[Dad2three]

There was no requirement in the Community Reinvestment Act that required banks to lend to marginal borrowers, just encouragement to try to lend to weaker borrowers in areas where the banks opened branches.

of course thats a lie. There would have been no point unless it had teeth!!

The CRA requires that each depository institution's record in helping meet the credit needs of its entire community be evaluated by the appropriate Federal financial supervisory agency periodically. Members of the public may submit comments on a bank’s performance. Comments will be taken into consideration during the next CRA examination. A bank's CRA performance record is taken into account in considering an institution's application for deposit facilities

LIKE I SAID
"just encouragement to try to lend to weaker borrowers in areas where the banks opened branches."



Given CEOs' proclivity for government bashing, any lenders being driven to write bad loans by the CRA would have been on CNBC screaming at the top of their lungs.

But that dog that didn't bark.

 

[Dad2three]

There was no requirement in the Community Reinvestment Act that required banks to lend to marginal borrowers, just encouragement to try to lend to weaker borrowers in areas where the banks opened branches.

of course thats a lie. There would have been no point unless it had teeth!!

The CRA requires that each depository institution's record in helping meet the credit needs of its entire community be evaluated by the appropriate Federal financial supervisory agency periodically. Members of the public may submit comments on a bank’s performance. Comments will be taken into consideration during the next CRA examination. A bank's CRA performance record is taken into account in considering an institution's application for deposit facilities

CRA BANKS were only 6% of ALL loans 2004-2007, AND not that all those loans were made for CRA purposes, lol


It is clear to anyone who has studied the financial crisis of 2008 that the private sector’s drive for short-term profit was behind it.

....More than 84 percent of the sub-prime mortgages in 2006 were issued by private lending. These private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year. Out of the top 25 subprime lenders in 2006, only one was subject to the usual mortgage laws and regulations. The nonbank underwriters made more than 12 million subprime mortgages with a value of nearly $2 trillion. The lenders who made these were exempt from federal regulations.


Lest We Forget: Why We Had A Financial Crisis - Forbes

 

[Toddsterpatriot]

No one pushed the banks to make bad loans. The banks lobbied Congress to repeal the restriction of Glass-Steagall on proprietary trading, and the government failed to exercise proper regulatory oversight of the sale of mortgage-backed securities. Prior to Gramm-Leach-Bliley, the banks operated under warehouse loan agreements in which the mortgages were pledged as security, and the banks retained ownership of the pledged mortgages. Once the restrictions on trading were repealed, the warehouse loans were replaced repurchase agreements in which the mortgage-backed securities were sold to the repo counterparty with the bank putting up cash collateral. When the mortgages starting going into default in 2006, this triggered the repo contracts that required the banks to buy back the nonperforming mortgages, leaving the banks with insufficient capital to meet obligations. Ironically, the purpose of the repurchase agreements was to provide liquidity and avoid risk of systemic failure; however it did not work in 2008 because in the hands of the bank a nonperforming mortgage is an illiquid asset. In this regard, there is nothing wrong with subprime loans per se. Virtually every VA and FHA loan is subprime. The same is true with commercial loans guaranteed by the SBA. These loans are not a problem provided that they are made with proper due diligence for collateralization and retained and serviced in house by the bank. The problem was the unregulated wholesale marketing of them as debt securities.

No one pushed the banks to make bad loans.

Baloney. I remember clowns protesting banks here in Chicago for not making enough loans to people with sketchy credit. One of those clowns is the whiner in the White House.

Prior to Gramm-Leach-Bliley, the banks operated under warehouse loan agreements in which the mortgages were pledged as security, and the banks retained ownership of the pledged mortgages.

Banks sold mortgages under Glass Steagall.
MBS existed under Glass Steagall.

The historical "originate and hold" mortgage model was replaced with the "originate and distribute" model. Incentives were such that you could get paid just to originate and sell the mortgages down the pipeline, passing the risk along



Out of Control Financial Innovation


By now the litany is familiar: the old model of banking, in which banks held on to the loans they made, was replaced by the new practice of originate-and-distribute. Mortgage originators—which in many cases had no traditional banking business—made loans to buy houses, then quickly sold those loans off to other firms. These firms then repackaged those loans by pooling them, then selling shares of these pools of securities; and rating agencies were willing to label the resulting product chicken—that is, to bestow their seal of approval, the AAA rating, on the more senior of these securities, those that had first claim on interest and principal repayment.

Everyone ignored both the risks posed by a general housing bust and the degradation of underwriting standards as the bubble inflated (that ignorance was no doubt assisted by the huge amounts of money being made). When the bust came, much of that AAA paper turned out to be worth just pennies on the dollar.




The Slump Goes On: Why? by Paul Krugman and Robin Wells | The New York Review of Books

Mortgage originators—which in many cases had no traditional banking business—made loans to buy houses, then quickly sold those loans off to other firms.

I know, just as Glass Steagall didn't prevent banks from making bad loans, it wouldn't have prevented non-banks from making bad loans either.

 

[EdwardBaiamonte]

LIKE I SAID
"just encouragement to try to lend to weaker borrowers in areas where the banks opened branches."

dear reread for comprehension!!!
"A bank's CRA performance record is taken into account in considering an institution's application for deposit facilities"


that means a banks charter could be withdrawn if it didn't satisfy CRA. That's a life and death threat not simple encouragement. Catch on now?

 

[Dad2three]

No one pushed the banks to make bad loans.

Baloney. I remember clowns protesting banks here in Chicago for not making enough loans to people with sketchy credit. One of those clowns is the whiner in the White House.

Prior to Gramm-Leach-Bliley, the banks operated under warehouse loan agreements in which the mortgages were pledged as security, and the banks retained ownership of the pledged mortgages.

Banks sold mortgages under Glass Steagall.
MBS existed under Glass Steagall.

The historical "originate and hold" mortgage model was replaced with the "originate and distribute" model. Incentives were such that you could get paid just to originate and sell the mortgages down the pipeline, passing the risk along



Out of Control Financial Innovation


By now the litany is familiar: the old model of banking, in which banks held on to the loans they made, was replaced by the new practice of originate-and-distribute. Mortgage originators—which in many cases had no traditional banking business—made loans to buy houses, then quickly sold those loans off to other firms. These firms then repackaged those loans by pooling them, then selling shares of these pools of securities; and rating agencies were willing to label the resulting product chicken—that is, to bestow their seal of approval, the AAA rating, on the more senior of these securities, those that had first claim on interest and principal repayment.

Everyone ignored both the risks posed by a general housing bust and the degradation of underwriting standards as the bubble inflated (that ignorance was no doubt assisted by the huge amounts of money being made). When the bust came, much of that AAA paper turned out to be worth just pennies on the dollar.




The Slump Goes On: Why? by Paul Krugman and Robin Wells | The New York Review of Books

Mortgage originators—which in many cases had no traditional banking business—made loans to buy houses, then quickly sold those loans off to other firms.

I know, just as Glass Steagall didn't prevent banks from making bad loans, it wouldn't have prevented non-banks from making bad loans either.

DUBYA REGULATOR FAILURE. Weird right?

http://www.usmessageboard.com/economy/362889-facts-on-dubya-s-great-recession.html

 

[Dad2three]

LIKE I SAID
"just encouragement to try to lend to weaker borrowers in areas where the banks opened branches."

dear reread for comprehension!!!
"A bank's CRA performance record is taken into account in considering an institution's application for deposit facilities"


that means a banks charter could be withdrawn if it didn't satisfy CRA. That's a life and death threat not simple encouragement. Catch on now?

TRY to grow a brain. NO IT DIDN'T DUMMY!!!

LIKE I SAID
"just encouragement to try to lend to weaker borrowers in areas where the banks opened branches."

THIS MEANS EXPANSION DUMMY

"A bank's CRA performance record is taken into account in considering an institution's application for deposit facilities"

 

[Toddsterpatriot]

It's repeal helped banks to diversify.

If you define diversification as extreme leverage and exposure then you're right.

Which banks got in trouble because of securities trading? Or derivatives?

Lehman.

Then we had AIG, Washington Mutual, Ambac, Fannie Mac and Fannie Mae. The institutions all failed due to derivatives exposure. If they weren't bailed out, they wouldn't be around today.

diversify: to produce or sell more kinds of products : to increase the variety of goods or services produced or offered by (someone or something)

Lehman.

We're talking about banks that take deposits, not investment banks.
Try to stay on topic.

And why did Lehman fail? They held mortgages bonds financed with overnight money. LOL!

Then we had AIG, Washington Mutual, Ambac

AIG, not a bank.

Washington Mutual failed because of mortgages, not securities trading or derivatives.

Ambac, not a bank.

Fannie Mac and Fannie Mae not banks and didn't fail because of securities trading or derivatives.

You should take a break, you're more confused than usual.

 

[EdwardBaiamonte]

"A bank's CRA performance record is taken into account in considering an institution's application for deposit facilities"

4. Enforcement
The CRA regulations contain several provisions relating to enforcing the CRA, including the effect that discriminatory lending practices will have on a bank’s CRA rating and the effect that a bank’s CRA record will have on its expansion applications. Evidence that a bank is engaged in discriminatory credit practices will have an adverse impact on the bank’s CRA rating.54 The degree of adversity depends on the extent and nature of the evidence and corrective action the bank has taken. The CRA regulations also state that the federal banking agencies will take a bank’s CRA record and public comments about that record into account when considering a bank’s application to establish a branch, relocate a branch, merge or consolidate with another bank, or acquire the assets or assume the liabilities of another bank.55 The regulations state that when considering an application, a bank’s CRA performance may be the basis for denying an application or conditioning approval of an application on an improved CRA record.