They weren't padding their scores and I used your own sources to show you that. They didn't need to. Everyone already had high CRA scores and I challenge you to show otherwise.
The reason this is important is not because I give two craps about the CRA. I think it should be repealed. Not because it forces the banks to do anything, but because it's a pointless piece of bureaucracy. None of the major banks will be in any danger of having a low score yet they still have to spend time and resources calculating and reporting the figures.
The reason it's important is because the recession was caused by a lack of regulation. Specifically by the repeal of Glass Steagall. It used to be that a bank made their money off the interest from your mortgage. After the repeal, they could make their money off of selling your mortgage to investors. Now, they don't care about your ability to pay back your loan. This is why they were giving out so many mortgages to people who clearly would not be able to pay them back. They needed more product to bundle and sell to investors. By the time the poor sucker defaults on his loan, the bank has already sold it. In most cases they went ahead and bet against it through AIG so they can make even more money off of it.
What's brilliant about what the banks have done since the crash, is that they've convinced dudes like you that it was too much regulation that caused this. You're so convinced that you will never admit you're wrong. That's some thorough brainwashing. If they could convince enough of you guys, they could actually come out of this thing with even less regulation than before.
edit
How long have you been in the construction business? Long enough to have seen the start of the bubble?
The CRA was double downed in 1994. From my observation, it was late 2002 when banks really starting lending like crazy. If the CRA was to blame, then why did it take so long for them to do this? why didn't it happen in 95 or 96? Why did it take 8 years?
edit agian
You actually typed out Federal Housing Authority. Still expect me to believe that you meant to type FDIC? Or is it that all this stuff is new to you and you don't know what you're talking about?
Actually it did, CRA seen an 85% growth in that time frame. CRA was the stepping stone Carter started and Clinton got the ball rolling.
[video=youtube_share;WTZIB6Sika4]http://youtu.be/WTZIB6Sika4[/video]
In order to achieve government-set housing goals, the GSEs employed increasingly lax underwriting standards that contributed to their increased exposure to risky debt. However, by enforcing less-strict standards and investing in subprime securities, the GSEs made it easier for those with poor credit scores to obtain mortgages, thereby aiding them in reaching their affordable housing goals. The GSEs' underwriting standards did not become more lax because of a lack of government regulation. Rather, the government pushed the GSEs to lower their standards in order to increase the availability of home mortgages for low-income Americans. The government first urged lenders to help low-income individuals get home loans when Congress passed the Community Reinvestment Act of 1977. This Act was passed in response to growing concerns that lenders were not providing loans to individuals from certain neighborhoods and encouraged lenders to lend to individuals with poor credit to assist them in purchasing a home, regardless of his or her creditworthiness. This government pressure continued to grow, particularly in the 1990s. For example, a 1992 federal law required that a "reasonable portion" of the GSEs' mortgage purchases support low-income individuals seeking to buy a home. Over time, that gentle urging was transformed into government-set quotas promulgated by HUD, requiring that a certain percentage of the mortgages that the GSEs purchase were made to the "underserved population." In 1996, the quota was set at 40%, and it continued to rise until 2008 when it reached 56%. Many commentators have argued that through these regulations, the government was promoting lower lending standards. The lower standards made it possible for nearly anyone to get a mortgage, even individuals with poor credit histories and little income. Therefore, the increased access to home ownership helped the GSEs reach their affordable housing goalsin 2004 nearly 63% of Americans were homeowners.
Others contend that these goals gave the GSEs an excuse to deviate from prudent underwriting standards so that it could take advantage of a more profitable but high-risk segment of the housing market. Between 2005 and 2007, 57% of the mortgages acquired by Fannie Mae were characterized as subprime (because borrowers had FICO scores of less than 620). Over this same period, 61% of the mortgages acquired by Freddie Mac were characterized in this same way. As of June 2008, Fannie was liable for $619 billion worth of subprime and Alt-A loans, while Freddie was liable for $392 billion. As of August 2008, the GSEs held or guaranteed a combined total of over $1 trillion in unpaid principal balance exposures on subprime loans.
A federal agency looked on as the GSEs implemented lower underwriting standards. The Office of Federal Housing Enterprise Oversight (OFHEO) was charged with overseeing the GSEs and was aware of the GSEs risky practices. However, it determined that their purchases of risky mortgages and MBSs did not warrant concern. As a matter of fact, OFHEO routinely noted the increased exposure of the GSEs to subprime default risk, but it never did anything to address it. Rather, its examinations of the GSEs regularly concluded that they both had sufficient capital and prudent credit-risk management. One reason that OFHEO was unable to effectively regulate the GSEs was because GSE executives negotiated with Congress so that the agency was subject to the appropriations process. This meant that the OFHEO's budget was subject to the will of politicians who the GSEs were able to manipulate with their lobbying tactics. According to one Freddie Mac lobbyist, OFHEO could either "appease Fannie and Freddie or get reamed in the budget." Therefore, it is not surprising that OFHEO was a weak regulator.
