Comments on: Bear Stearns, the CRA, and Freddie Mac http://cafehayek.com/2008/09/bear-stearns-th.html where orders emerge Mon, 16 Jan 2012 02:06:33 +0000 hourly 1 http://wordpress.org/?v= By: Jeff http://cafehayek.com/2008/09/bear-stearns-th.html/comment-page-1#comment-181695 Jeff Fri, 18 Sep 2009 18:13:00 +0000 http://localhost/wordpress/?p=3002#comment-181695 This is not quite what the study says, and all you need to do to convince is actually follows the link. Here are the conclusions verbatim: By every measure, CRA loans are not as profitable as non-CRA loans. No institution reported that CRA lending was more profitable than non-CRA lending for home mortgage, refinance, home improvement, or small business loans. For home purchase and refinance lending, three times as many institutions reported their CRA-related loans not profitable as compared to non-CRA-related loans. One out of three large institutions report that CRA lending in the home mortgage and refinance markets is not profitable. Three times the value of CRA home improvement loans are not profitable as compared to non-CRA loans. Delinquency rates for CRA loans in the home purchase and refinance market are twice that for non-CRA loans. Among all institutions, about 40 percent of CRA special lending programs are not profitable. For large institutions, 58 percent report that their CRA special lending programs are not profitable. This is inconsistent with the safety and soundness requirements of CRA. This is not quite what the study says, and all you need to do to convince is actually follows the link. Here are the conclusions verbatim:

By every measure, CRA loans are not as profitable as non-CRA loans.

No institution reported that CRA lending was more profitable than non-CRA lending for home mortgage, refinance, home improvement, or small business loans.

For home purchase and refinance lending, three times as many institutions reported their CRA-related loans not profitable as compared to non-CRA-related loans.

One out of three large institutions report that CRA lending in the home mortgage and refinance markets is not profitable.

Three times the value of CRA home improvement loans are not profitable as compared to non-CRA loans.

Delinquency rates for CRA loans in the home purchase and refinance market are twice that for non-CRA loans.

Among all institutions, about 40 percent of CRA special lending programs are not profitable. For large institutions, 58 percent report that their CRA special lending programs are not profitable. This is inconsistent with the safety and soundness requirements of CRA.

]]> By: portia9 http://cafehayek.com/2008/09/bear-stearns-th.html/comment-page-1#comment-30802 portia9 Fri, 03 Oct 2008 16:20:36 +0000 http://localhost/wordpress/?p=3002#comment-30802 <p>Article from 1998 on how to convince banks to sell their CRA portfolios. </p> <p>http://www.allbusiness.com/personal-finance/real-estate-mortgage-loans/677967-1.html</p> <p>Also, 2000 Fed study on CRA loans that concludes they have a 2x default rate and are not profitable.</p> <p>http://www.banking.senate.gov/docs/reports/cra-sun/frb-cra.htm</p> <p>Fascinating to see how this all came together.</p> Article from 1998 on how to convince banks to sell their CRA portfolios.

http://www.allbusiness.com/personal-finance/real-estate-mortgage-loans/677967-1.html

Also, 2000 Fed study on CRA loans that concludes they have a 2x default rate and are not profitable.

http://www.banking.senate.gov/docs/reports/cra-sun/frb-cra.htm

Fascinating to see how this all came together.

]]> By: Sam Grove http://cafehayek.com/2008/09/bear-stearns-th.html/comment-page-1#comment-30801 Sam Grove Tue, 23 Sep 2008 00:59:13 +0000 http://localhost/wordpress/?p=3002#comment-30801 <p>How about if the government prints out enough money, sends it out to taxpayers, and they can send it right back to pay their taxes with?</p> How about if the government prints out enough money, sends it out to taxpayers, and they can send it right back to pay their taxes with?

]]> By: Bob Smith http://cafehayek.com/2008/09/bear-stearns-th.html/comment-page-1#comment-30800 Bob Smith Mon, 22 Sep 2008 22:50:22 +0000 http://localhost/wordpress/?p=3002#comment-30800 <p>What now? Hope the government comes to its senses and backs away from bailing anybody out. Barring that, pray it doesn't screw things up too badly.</p> What now? Hope the government comes to its senses and backs away from bailing anybody out. Barring that, pray it doesn't screw things up too badly.

]]> By: John Smith http://cafehayek.com/2008/09/bear-stearns-th.html/comment-page-1#comment-30799 John Smith Mon, 22 Sep 2008 19:17:29 +0000 http://localhost/wordpress/?p=3002#comment-30799 <p>Bob Smith, keen observation. </p> <p>Bob Smith wrote:<br /> “They[Wall Street] foolishly assumed that "insurance" could substitute for collateral, that there was no counterparty risk in their default swaps.”</p> <p><br /> BUT – as history reveals itself the government IS backing the “Insurance” as collateral.</p> <p>What now?<br /> </p> Bob Smith, keen observation.

Bob Smith wrote:
“They[Wall Street] foolishly assumed that "insurance" could substitute for collateral, that there was no counterparty risk in their default swaps.”

BUT – as history reveals itself the government IS backing the “Insurance” as collateral.

What now?

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