Posted by
Always To The Right on Monday, November 17, 2008 6:12:16 PM
Two months ago,
I noted how a September 1999 article in the Los Angeles Times praising
the Clinton administration’s enforcement efforts of the Community
Reinvestment Act inadvertently showed how they created the housing
bubble by praising all of the excesses of the White House and
Congress. King BanaianCity Journal
article from the following year that took a much-less complimentary
look at the CRA and government use of it — and predicted almost exactly
what would follow eight years later. In fact, it also predicted the
scope of the collapse
It did much more than that, though — it empowered “community organizers” as the shock troops of the CRA
pointed out a
And what did all of this activity do? It forced banks to make bad
loans, and in some cases without down payments — which splintered the
informal CRA alliance of community organizers. One group in
particular, NACA, declared down payment requirements “racist” and
insisted on issuing mortgages without them. Even other CRA-based
activists saw the damage this would do to marginal neighborhoods, but
eventually Fannie Mae and Freddie Mac incentivized sub-prime loans so
much that no-down mortgages became de rigeur.
Now that these loans have begun defaulting at high rates, what will
happen to these neighborhoods? Probably what Howard Husock predicted
in early 2000: they will deteriorate, thanks to a lack of commitment by
homeowners already or almost forced out. Thanks to a lack of credit,
it may take years to even start reversing that damage.