The Fed today released a paper in its Finance and Economics Discussion Series that looks into whether the subprime bubble was caused by the Community Reinvestment Act, which requires banks to lend to lower-income borrowers, or by Fannie and Freddie lowering credit standards for low-income borrowers. Short answer: no.
We find little evidence that either the CRA or the GSE goals played a significant role in the subprime crisis. Our lender tests indicate that areas disproportionately served by lenders covered by the CRA experienced lower delinquency rates and less risky lending. Similarly, the threshold tests show no evidence that either program had a significantly negative effect on outcomes.
It’s a neat paper though it’s suggestive more than probative – as the researchers admit, they can’t prove much about the performance of Community Reinvestment Act or Fannie/Freddie loans without data on those loans, which are not public. Instead, they draw conclusions based on the prevalence of CRA lenders in individual census tracts, and based on performance of loans just above and just below cutoffs for GSE and CRA eligibility. So it doesn’t let Barney Frank completely off the hook, and it carries a disclaimer that “[t]he analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Board of Governors,” but still – will this be enough to provoke Rick Perry to put his treason-huntin’ boots back on?
The Subprime Crisis: Is Government Housing Policy to Blame? [FRB Finance and Economics Discussion Series]
So Fannie and Freddie didn't really go under? What a relief.
We can't say for sure that it did or didn't influence the crisis because we have no factual data to review. Therefore after 6 months of "reviewing" we'll say it didn't.
Please find the attached invoice for services renderred (Labor, Travel, Expenses, Overtime, etc)
short answer: no
long answer: yes
Yeah, so we couldn't get access to the actual source data we needed for the study (i.e. CRA or Fannie/Freddie loans data) so we found a 5th derivative data set and drew our conclusions from that. Close enough for government work!
-Federal Employee
If he wasn't the gunman he surely suggested they take the convertible.
-guy who loves a grassy knoll
Well don't look at me…
Chart, please
lights off, with a .44 bed side to finish the job after i finish
best post yet matt, by about 400 wds
Don't worry. They will still nail him for personally causing the food price spikes…….but fortunately for him he likes being nailed.
Of course because 9 to 5ers who drive BMWs and live in McMansions didn't cause the financial crisis. 9 to 5am ers who drive BMWs and live in relative shitholes in NYC caused the financial crisis.
+1 for length
-1 for neat
it's "suggestive more than probative"? nerd
Thanks for gracing up with your presence, Michael Moore.
Everybody knows it was those people’s fault. It always is.
Q: What's the difference between "suggestive" and "probative"?
A: "Can I buy you a drink?" is suggestive; "How about I put my dick in your mouth." is probative.
Last time I saw a mouth like that, it had a hook in it.
R. Dangerfield
Blaming the CRA was a politician's way of busting out a game of Candyland for the kids. Keeps the gullible distracted from backing policies that would actually prevent such a meltdown in the future. There is a whole crop of folks content to lay the entire blame on urban mortgage shenanigans: sans these ghetto loans, no collapse in 2008 and all would be peachy, they tell themselves.
Hillbilly
So what the government is saying is that putting no money down to buy a home was not the cause of people walking away from their mortgage
Too bad many of you liberal i-bankers out there would vote for a schmuck like Frank. What America always fails to grasp is Gordon Gecko was a democrat! Go Bawney Fwank! If you can't add value anywhere or generate revenue what do you do? You go into politics!
"Derivative"…what now?
-State Employee
So Fed researchers have identified a smell. They are not sure if the smell is a pile of shit, a dead body or Barney's pits. They will get back to us when they secure more funding to investigate further. This will require Congress' & Barney's vote.
What smells here?
''These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis. 'The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
Representative Barney Frank of Massachusetts
New York Times, New Agency Proposed to Oversee Freddie Mac and Fannie Mae, September 11, 2003
What a bunch of BS, typical Fed study.
Yep, and the federal government declared that it didn't create the 16 trillion dollar deficet and the 50 trillion+ upcomming shortfall in all the entitlements.
The federal government only produces one thing consistantly and that is lies.