Community Reinvestment Act of 1977

[From 9/27/08, in response to conservative claims that the Community Reinvestment Act of 1977 "forced" the banks to make bad loans, causing financial meltdown.]

The Community Reinvestment Act of 1977 (CRA) is getting a lot of blame for our current economic crisis. Enacted to prevent mortgage discrimination (“redlining”) against low-income and minority families, many now claim that the act “forced” lenders to make bad loans to people with poor credit, resulting in financial disaster. Is this analysis correct? Let’s look at it.

CRA was enacted in 1977; the subprime lending at the heart of the current crisis exploded more than 25 years later. Additionally, the Bush administration weakened CRA regulations in 2004 by exempting small and midsized banks from the law’s toughest standards. Yet subprime lending intensified—at the very time when activity under CRA had slowed and the law had weakened. So how can CRA be the main engine for subprime lending?

It becomes even more difficult to blame CRA for the mortgage meltdown when one realizes that the law doesn’t even apply to most of the loans being made today. Half of subprime loans came from lenders not subject to CRA, and another 25 to 30 percent came from institutions not required to fully comply with the law (see http://www.house.gov/apps/list/hearing/financialsvcs_dem/barr021308.pdf).

Perhaps one in four subprime loans were made by the banks and thrifts fully subject to CRA.

But for the sake of argument, let’s say that 100% of subprime loans were made because the government required lenders to do so. Even then, financial meltdown wouldn’t have occurred if that debt hadn’t been sold all over the world as mortgage-backed securities.

Without the sale of these securities, some lending institutions would have (rightly) gone under as poor-risk borrowers became unable to pay their mortgages, but the bad debt would not have been integrated into the entire financial system.

In other words, it wasn’t the debt itself; it was the very lucrative selling of the debt that got us where we are today.

Poor People Didn't Ruin the Economy

[From 9/21/08, in response to a Walter Williams column about the U.S. financial crisis.]

To the editor:

Contra Walter Williams (“Economic crisis stems from failure of government policy,” September 21), anti-redlining laws simply attempt to force banks to apply the same criteria to all potential borrowers. Such laws don’t force banks to make loans to bad credit risks. The banks decided to do that themselves.

Mortgage lenders made loans to people with bad credit on the belief that rising housing prices would keep the notes out of default. Buyers were encouraged to purchase upscale homes they really couldn’t afford. Unsurprisingly, buyers thought this was a great idea. Why live in Madeira when West Chester is calling?

Traditional redlining schemes denied loans to middle-income blacks and Hispanics that were made available to lower-income (i.e., riskier) white customers. Laws that restricted such practices had almost nothing to do with our current problems.

It’s strange how so many are blaming the poorest Americans for our current financial crisis (when they’re not blaming Bill Clinton, that is). Don’t middle- and upper-class Americans who just couldn’t be satisfied with what they had need to assume some of the responsibility too?

Palin and the Press

[From 9/7/08, regarding Sarah Palin's refusal to speak with the press.]

To the editor:

The McCain campaign has refused to allow the media to interview Sarah Palin. McCain campaign manager Rick Davis tells Fox News that Palin won’t give any interviews until she feels “comfortable” giving one, which might not be “until the point in time when she’ll be treated with respect and deference.”

Please remember: In four and a half months, Sarah Palin could be president. She would have more global power than any other woman in history. Yet today her own handlers think she’s so unprepared and knows so little about the challenges and tasks facing the U.S. that she can’t even give a softball interview. That’s really all we need to know about her—or about McCain’s judgment.

Ready on Day One? She’s apparently not even ready to face down Meredith Vieira or Anderson Cooper. Can you imagine the furor if Obama were hiding from the press like this?

The Palins and the Alaska Independence Party

[From 9/3/08, about the Sarah and Todd Palin's association with the Alaska Independence Party.]

To the editor:

Do Enquirer readers remember how Michelle Obama was attacked for saying—just once—that she was proud of her country “for the first time in [her] adult life”?

Now it turns out that Todd Palin is so proud of his country that for seven years he was a member of the Alaska Independence Party, a secessionist group intent on removing the state from the union.

The AIP’s founder, Joe Vogler, has been quoted as saying, “The fires of hell are frozen glaciers compared to my hatred for the American government.”

Compare and contrast.

Experience: Palin vs. Obama

[From 8/31/08, regarding the relative "experience" of Sarah Palin vs. Barack Obama.]

To the editor:

I see that some conservatives are claiming that Sarah Palin is actually more qualified than Barack Obama to be on a presidential ticket because she has more "executive experience" than Obama, having served as governor of Alaska for 20 months.

I guess by that metric, she has more executive experience than McCain, too. Heck, maybe she should be at the HEAD of the ticket!

What nonsense.

Look, if you prefer Palin’s conservative politics to Obama’s, that’s great. But don’t insult my intelligence by arguing that the two of them are somehow of equal stature. Because they’re not.

Obama has a law degree from Harvard. Palin has a BS in journalism from the University of Idaho.

Before going into politics, Obama served as editor of the Harvard Law Review, was a community organizer in Chicago, and was a professor of constitutional law at the University of Chicago for twelve years. Palin was a part-time TV sports anchor and fisherwoman.

Obama has been state senator and then U.S. senator of one of our most populous states. Palin served as mayor of an Alaska hamlet and was chairman of the Alaska Oil and Gas Conservation Commission for one year before becoming governor of the 47th most populous state.

Obama is the author of several serious books about U.S. domestic and foreign policy. Palin, er, is not.

And . . . oh yes . . . during the Democratic primary, Obama defeated perhaps the most formidable political machine in the United States—the Clintons. Surely you can’t imagine Sarah Palin achieving this on her own.

So don’t come at me with the line that they’re both political neophytes. Palin is unqualified to be one heartbeat away from the presidency. It’s as simple – and as awful – as that.

Calm Down, PUMAs

[From 8/27/08, in response to Hillary Clinton supporters who threaten to vote for John McCain.]

To the editor:

I’m sure that Marilyn Gale (“Obama’s choice of Biden shows disrespect for women,” Aug. 27) and Dale Ballinger (“Obama lost election with his choice,” Aug. 27) did not support Hillary Clinton for president because they wanted four more years of Bush-like governance. Why then would they vote for a candidate who will give them just that?

Clinton supporters, voting for Barack Obama will get you more of what you want than voting for John McCain will. You would do well to heed the questions Hillary asked Tuesday night at the Democratic Convention: Were you in this campaign just for her? Or were you in it for all the people in this country who feel invisible?

Hillary Clinton doesn’t want John McCain to be president. Why do you?