2. Criticism: In Congressional debate on the Act, critics charged that the law would distort credit markets, create unnecessary government regulation and lead to unsound lending.

3. Congress directs the banking regulatory agencies to ensure that banks and savings and loans serve the credit needs of their local communities in a safe and sound manner....With little detail of how banks were expected to meet their new quotas.

7. This law greatly increased the ability of community organizers and advocacy groups, to access banks records, there by influencing the lending policies of banks....Backed up by the threat of lawsuits limiting expansion by banks if they did'nt comply. 

10. With the subsequent surge in bank mergers and acquisitions advocacy groups increasingly protested bank applications on CRA grounds. Agencies began to hold public hearings to allow community involvement. In response to public pressure many institutions established separate business units and corporations to facilitate CRA lending.

 11. In July 1993, President Clinton asked regulators to reform the CRA in order to reduce paperwork and reward performance.  Helping to ease the the credit and income requirements to people with poor credit and limited income! 

12. The CRA regulations were substantially revised according to neighborhood, income, and race; encouraging community groups to complain to banks when they did not meet their CRA obligations; allowing community groups that marketed sub prime loans to low income people to collect a fee from the banks just like other loan marketers

13. The U.S. Department of Housing and Urban Development's mortgage policies fueled the trend towards issuing risky loans. In 1995, Fannie Mae and Freddie Mac began receiving affordable housing credit for purchasing mortgage backed securities which included loans to low income borrowers.

14. This resulted in the agencies purchasing sub prime securities. Sub prime mortgage loans surged by 25% per year between 1994 and 2003, resulting in a nearly ten-fold increase these loans in just nine years. As of November 2007 Fannie Mae held a total of $55.9 billion of sup rime securities and $324.7 billion of Alt-A securities in their portfolios. As of the 2008 Freddie Mac had $190 billion in Alt-A mortgages. Together they have more than half of the $1 trillion in sub prime mortgages.

14. During March 1995 congressional hearings William A. Niskanen, chair of the Cato Institute, criticized political favoritism in allocating credit and that there was no assurance that banks would not be expected to operate at a loss. He predicted they would be very costly to the economy and banking system, and that the primary long term effect would be to harm and contract the banking system. He recommended Congress repeal the Act.

15. In 1997, First Union Capital Markets and Bear, Stearns & Co launched the first publicly available securitization of CRA loans, issuing $384.6 million of such securities.

16. In 1999 the Congress enacted and President Clinton signed into law the Gramm-Leach-Bliley Act, also known as the "Financial Services Modernization Act," which repealed the part of the Glass-Steagall Act prohibiting a bank from offering a full range of investment, commercial banking, and insurance services.

17. The bill was killed in 1998 because Senator Phil Gramm

18. Senator Phil Gramm wanted the bill to expand the number of banks which no longer would be covered by the CRA. He also demanded full disclosure of any financial deals which community groups had with banks, accusing such groups of "extortion.

19. The Clinton administration wanted to prevent banks from expanding into insurance or securities unless they were compliant with the CRA.

20. In 1999 Democratic Senators Christopher Dodd and Charles E. Schumer broke another deadlock by forcing a compromise between Gramm and the Clinton administration which wanted to prevent banks from expanding into insurance or securities unless they were compliant with the CRA

21. On signing the Gramm-Leach-Bliley Act, President Clinton said that it, "establishes the principles that, as we expand the powers of banks, we will expand the reach of the Community Reinvestment Act".

22. A study by the Joint Center for Housing Studies at Harvard University, that found that "data for 1993 through 2000 show home purchase lending to low and moderate-income people living in low and moderate income neighborhoods grew by 94 percent more than in any of the other income categories.  A September 30, 1999 New York Times article stated, "... the Fannie Mae Corporation is easing the credit requirements on loans... The action... will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough... Fannie Mae... has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people... borrowers whose incomes, credit ratings and savings are not good enough... Fannie Mae is taking on significantly more risk... the government-subsidized corporation may run into trouble... prompting a government rescue... the move is intended in part to increase the number of... home owners who tend to have worse credit ratings..."

 23. Between 2000 and 2002 Fannie Mae securitized $394 billion in CRA loans with $20 billion going to securitized mortgages. In 2000, in order to expand the secondary market for affordable community-based mortgages and to increase liquidity for CRA-eligible loans, Fannie Mae committed to purchase and securitize $2 billion of My Community Mortgage loans. In 2007 Ben Bernanke suggested further increasing the presence of Sallie Mae and Freddie Mac in the affordable housing market to help banks fulfill their CRA obligations by providing them with more opportunities securitize CRA-related loans.

24. In an article for the New York Post, economist Stan Liebowitz wrote that the CRA encouraged a loosening of lending standards throughout the banking industry despite warnings of default. Banks were allowed to loan to consumers who were not credit worthy with "no verification of income or assets; little consideration of the applicant's ability to make payments; no down payment." According to Liebowitz, the chief executive of Countrywide Financial said that in order to approve minority applications, "lenders have had to stretch the rules a bit."

The concern from advocacy groups like acorn was centered around balloon mortgages a type of mortgage where the full balance of the mortgage could be called in after a period of time defined by the mortgage contract. As well as adjustable rate mortgages, where the interest rate is fixed for a period of time and then can rapidly go up causing substantial increase in payments. These kinds of mortgages were intended to give a potential client with a poor credit history and limited income an opportunity to buy a home giving them a 2 or 3 year period of time to clean up their credit and take advantage of expanding property values. Because the possibility of default was much higher the risk to lenders was offset by higher rates and less favorable terms. Creating a shared risk between borrowers and lenders.

27. Congressman Ron Paul, who serves on the United States House Committee on Financial Services, partially attributed the current economic downturn to the Community Reinvestment Act, charging it with "forcing banks to lend to people who normally would be rejected as bad credit risks.

28. Economist Russell Roberts blamed the combined effects of excessive Federal Reserve credit expansion, the CRA, the implied guarantee to Fannie Mae and Freddie Mac, the Taxpayer Relief Act of 1997, and other policies for causing the crisis.

29. Federal Reserve chair Ben Bernanke has stated that an underlying assumption of the CRA that more lending equals better outcomes for local communities may not always be true. However, he also notes that at least in some instances, the CRA has served as a catalyst, inducing banks to enter under served markets that they might otherwise have ignored

      In his statement before the same hearing, New York University Professor of Economics Larry White stated that regulator efforts to lean on “ banks in vague and subjective ways to make loans is an inappropriate instrument for achieving those goals.”

29. In 2002 Kathleen C. Engel and Patricia A. McCoy published a study of the predatory lending implications of the CRA, noting that by the late 1990s, predatory high cost mortgages to “gullible borrowers” were leading to foreclosures against low-income people of color and the elderly. They found evidence of such lending practices by CRA covered banks, both directly in their own lending and indirectly in buying other parties’ predatory loans as investments or to help them obtain CRA compliance credit.

30. Gerald P. O'Driscoll former vice president at the Federal Reserve Bank of Dallas stated that Fannie Mae and Freddie Mac had become classic examples of crony capitalism. Government backing let Fannie and Freddie dominate the mortgage-underwriting. "The politicians created the mortgage giants, which then returned some of the profits to politicians sometimes directly, as campaign funds; sometimes as "contributions" to favored constituents.

    If you believe that global warming threatens all life on earth and the planet on which we live, and is primarily the product of western industrialization of which the U.S. is the leading cause. Then every politician and business leader who stands in the way of change is the enemy of the planet and all living things!

    If you believe that war is the product of human greed and that the strong exploit the weak so they can strip other nations of there natural recourses. And that by doing so they destroy indigenous cultures and there environment, then you must believe the need for change!

    If you believe that U.S. consumes the majority of the worlds limited resources and leaves the bulk of the world struggling to survive on the scraps, while Americans become increasingly fat and jaded, then you must believe the need for change!

    If you believe that racism, sexism, homophobia, patriarchal oppression and violence is the product of a deeply warped culture attempting to impose its disease on other people. Then you must be for change!

      Questioning the truthfullness of such statements and whether they are they unique to western or U.S. culture needs to be answered.  Is this the nature of its people, and who are its people? Since African Americans exist in this culture as victims of slavery and racism then its clear we are not speaking about them. Woman also are the victims of a patriarchal culture. Latino's flee there own countries as the result of American hegemony and exploitation coming into this country as refugees. who create a supply of cheap labor to increase the wealth of an American plutocracy.  Leaving only white men.

      Quoting feminist writer Susan Sontag; The white race is the cancer of human history! Similar statements about the founding fathers from Jesse Jackson, the American founders were nothing but a bunch of white men! From Cynthia McKinney congressional representative from Georgia we get; what did the Bush administration know about 9/11 and why did they not warn the innocent people that were murdered! All of these people are part of more than a fringe culture but a part of mainstream culture that clearly thinks that America from its founding to its present is a murderous, genocidal thug formed by the worst instincts of human nature. If this is true you must believe the need for change!

     Michele Obama the wife of Barak Obama while speaking at a fund raiser for her husband said, for the 1^st time in my life I am really proud of my country, in reference to her husbands campaign. When we look at political ideology that informs the far left we begin to understand her meaning more clearly. It isn’t that most liberals adhere to such extremes but these ideas are clearly threaded thru the ideology that informs much liberal thought. For Jesse Jackson equality for blacks doesn’t really begin until the civil rights act of 1965. From slavery which legally began in 1654 and ended with the passage of the 13^th amendment to the constitution in 1865,thru 100 years of Jim Crow, constitutes more than 300 years of legal discrimination. Starting with Martin Luther King’s Alabama bus boycott in 1955 till the voting rights act of 1965, a span of 10 short years culminates with the end of 300 years of legal discrimination. Ten years vs. 300 years, collective political action with government mandated solutions vs. capitalism. According to this veiw there can be only one answer. Markets driven by personal greed cannot be trusted and must be restrained . The vision that government in accord with enlightened private and public leadership as the solution is validated.

      Both subtilities of meaning and context are important. When we attempt to judge history it is necessary to have a objective standard and a willingness to recognize our own potential for bias. Hopefully we move beyond what we believe no matter the depth of our convictions. To a cold search for the truth. The facts as they can best be understood, without prejudice since the nature of prejudice is the question before us.

     Much of the prosperity that occurred during the mid 1990’s into early 2000 came as the result of speculation over emerging technologies and the financial potential of the internet. The belief that business without national boundries and global consumers could be brought together with the click of a button produced a feeding frenzy of investment and speculation. How best to tap into this brave new financial world moved hungry investors into uncharted territory. What resulted was closer to the pioneers who flocked westward seeking their fortune with little law and great risk, as the result many became wealthy beyond imagination, others found financial ruin.

      By the middle of 2001 speculation was coming to an end which was hastened by the attack on the world trade center, pushing a economy that was beginning to show signs of struggle into recession. The Federal Reserve moved quickly to spur economic activity by cutting interest rates. Investors seeking a safer haven for investment shifted from stocks, into Real Estate and coupled with the lowest interest rates in decades helped to fuel a real estate boom. Zero interest on credit cards and low and no down payment auto loans and mortgages made it attractive for consumers and business alike to borrow. The new dollars that flooded the market primed a struggling economy which saved jobs and created new ones. Without banks the auto and real estate industry the recession of 2001 would have almost certainly been longer and harsher. However, it also set the stage for rising debt, fueled by the hope that the economy would eventually begin a new growth cycle based upon something more substantial than borrowed money.

     A similar phenomenon occurred around the country, driven by low interest rates and easy credit, fueling inflation in the housing market. Normally banks tend to be conservative in their lending practices. Lenders make little money when they write new mortgages, most of their profit comes by selling the new mortgage to a secondary market on wall street. Bundling together prime and sub prime loans in large numbers enabled banks to make loans to people with poor credit and limited income minimizing the risk to investors. Without someone willing to buy those loans banks would be less likely to take such risk, but with so many jobs and so much profit at stake no one waned to be responsible for shaking the foundation of the nations prosperity. With property values soaring people could use the equity in their homes to buy their way out of trouble.

     The number of people that had refinanced their homes 3 or more times in only a few years exploded, seeking just another twenty five thousand dollars to keep the ship a float. Rather than lenders engaging in predatory lending practices, borrows ran up heavy debts with little sense of responsibility, after all their was more money just another loan away. Home ownership has been a primary source of wealth creation in the U.S. Owning a home can put your children thru school, help with retirement and be a source for investment . It can also be used like a bank account giving people the opportunity to buy things they normally couldn’t afford. With rapidly increasing values people could run up their credit cards, buy expensive cars and even second homes looking to capitalize on rising values, all paid for by home equity and creative financing.

     No nation on earth makes it easier to borrow money than the United States. Limited government regulation means that lenders will adjust their lending practices based on their own assessment of risk. Using credit reports as a means of looking at how consumers pay back debt allows a lender to see a decade of credit history. More than sufficient time to understand the problem of high risk loans. Only a few years before the housing boom a person with a questionable credit history and an inability to document their income would be required to have a sizable down payment. Normally 20% which diminished the risk of default since the potential borrower would have a substantial investment of their own money in the new home. After 1999 things would change a combination of wide spread banking deregulation and pressure to increase home ownership among minorities would create a whole new class of borrowers and a new market for international investors.

      The question of why banks and wall street investors would take such risk is really at the core of the problem. Profits and ever increasing competition motivated lenders to find new and creative ways to capture a larger share of the market. None of this would have been possible without subsidy motivating normally cautious institutions to abandon conservative lending practices. Fannie Mae and Freddie Mac are privately owned companies that are securitized by the federal government. Both expanded their lending criteria to take increased risk with sub prime borrowers and they weren’t alone. Dozens of new lenders emerged eager to take advantage the fastest growing part of the explosive real estate market funded by a flood of international money. Motivated by the promise of substantial profits and the good intentions of the federal government.

     Pressure to increase home ownership among minorities and people with limited income and poor credit came in 1977 from the Carter administration in the form of the Community Reinvestment Act. In 1997 new teeth were put into the original law by the Clinton administration limiting new investment opportunity for banks if they didn’t comply. This gave increased leverage to minority business’s and communities to block new mergers with threats of lawsuits. In an effort to conform banks were forced to find increasingly exotic ways to lend to sub prime borrowers and with the government willing to subsidize the risk banks and investors were all to happy to comply. The nature of any subsidy is to produce more of what is being subsidized Pay farmers to grow corn and you get more corn. Pay them to grow less corn you get more farmers producing less corn. Subsidizing sub prime mortgages increased their numbers and they grew at double the rate of conventional home loans, substantially increasing the risk of serious financial failure.

     Programs to help minorities and people with modest credit and limited down payments were already in place more than 40 years before the Community Reinvestment Act. In 1934 the Federal Housing Administration was created as a way to increase home ownership. FHA as it became known is one of the few federal programs that is not paid for by tax payer dollars. Instead it is largely self sustaining with premiums paid by the borrower insuring a portion of the mortgage against default. Making it possible for private institutions such as banks, savings and loans or credit unions to lend to people with less than perfect credit by helping to insure the lender against loss.  However under FHA guidelines the client must be able to document sufficient income to pay their monthly debts. With pressure from the Federal Government to increase home ownership, programs like FHA weren’t enough. The criteria for determining credit worthiness would have to change. Enabling home buyers with poor credit no down payment and no closing costs to walk into a home without any financial stake of their own, and do little more than sign their name.