Flygirl--It's okay, we're having fun :-D
Kathy--You are obviously an intelligent woman who does her homework. Sounds like you might have a bit of a jounalism background? I've worked in PR as well, and it's easy to separate the wheat from the chaffe. The Bush list of everything he did to try to prevent the financial crisis is chaffe as it was obvious that the White House had to do something to separate itself from the crisis. Plenty of examples of him in more compromising positions. Politicians play both sides all the time.
In the ChronWatch article, I am fascinated by the flow. It starts with a quote, which I haven't checked by I'm going to assume is correct: “discrimination may be observed when a lender’s underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower–income minority applicants.” Sounds reasonable so far. Then the author goes on to say that Lenders were told that credit history, proof of income, and source of downpayment were outdated criteria. No quotes. So, who said that? How many lenders were told that? When were they told that?
There's no doubt that CRA is a tough sell. It was tougher in the Eighties. I worked for the nations largest S&L to fail in the S&L crisis of the '90s (Home Federal S&L of San Diego). While I was in the La Jolla, CA office, where nary a CRA was even contemplated, I remember the hand wringing of trying to meet CRA guidelines. The only poor folk we saw were my fellow UCSD students! We couldn't get CRA applicants and it became a matter of having branches in parts of town that weren't as appealing. Banks wanted to be where the money was. How do you attract good applicants, who may not have a lot of money but nonethelss can afford the mortgage payment on an inexpensive home? CRA no doubt had unintended consequences, but there was clearly a lack of lending to black communities.
If you are a lender, you are ultimately responsible for your lending practices. Plenty of lenders today are in great shape, even the ones subject to CRA. (HomeFed was severely weakened because of bad lending criteria in its commercial portfolio, not CRA by the way.)
Most of the blame lies squarely at the feet of Fannie Mae and Freey Mac, and I would argue Moody and S&P contributed by furthering the scheme. Fannie's and Freddy's egregious reduction of lending standards occurred int he 2004/2005 timeframe. You can find plenty of blame for both parties if you look but this is more of a systemic Washington issue. Fannie and Freddy had a lot of lobbying money. They pandered to both parties. Buying politicians is both cheap and legal, as long as you jump through the proper hoops. If there is one thing I would hope we could all agree on, it's that lobbying money is corrupting and we need stricter campaign finance laws.