Thursday, October 15, 2009

CRA : Far From Blameless

As with any debate, both sides love to mischaracterize things, even on this blog, via snide innuendo mostly. I'm guilty of it as well. However, there are somethings that a dash of sarcasm can't stand up against. For this, I am defending my post regarding the stimulus, not the part about the stimulus directly, but specifically 84 words regarding the Community Reinvestment Act ("CRA") found in piece totaling over 1,100 words (word counting is all the rage on the internet, right?)

And even though I will go ahead and assume most people will either skim this piece given my intro, or roll their eyes and not actually read any support I throw out there, whether because they are in a hurry or facts are inconvenient, doesn't really concern me. The reason being, in my own self righteousness, I've read most every damn word posted or linked to on this site because I feel it's necessary.

Ugh.

Now then, in this piece linked to in this post, Robert Gordon professes his belief that CRA is not responsible - in any sense whatsoever - for the problems we are facing today in this country. If you read it, it's very convincing. He does a good job laying things out simply and making a straight forward case against how conservatives blame CRA for the housing market. He even makes some good, valid points - mostly about profit motive.

But, he fails to appreciate the cycle which led to the current state of affairs, which indeed started with, what else, CRA.

In studying the history behind the law during my final semester at STCL, I was able to follow the progression, over 30 YEARS, from CRA to what we have now. And, I'll direct you here (though I doubt anyone will trouble themselves and actually read it), for a fairly well laid out defense of this position, instead of quoting or paraphrasing it directly. The article addresses step-by-step, the contentions I've heard and read regarding why CRA is a factor in our current economic crisis.

I must say, however, that when I read the article by Mr. Gordon, my initial reaction was, "he's totally missing the point. Without CRA, we wouldn't have gotten to this point in the first place." Does this mean that without CRA, the Gramm-Leach-Bliley would have come or not come around? I don't know, that's something we can never know because the past is unchangeable.

I will also directly concede that many conservatives abhor governmental regulation, but, as I said in my previous post, I believe that good laws are necessary to keep things balanced, that regulation is, not only helpful, but necessary to avoid the raising up of robber barons and whatnot. But, just as hurtful as the absence of regulation is, regulation that is punitive, overly restrictive, hearts-in-the-right-place-but-makes-no-economic-sense, commerce killing is just as bad. CRA falls into the category of punitive and hearts-in-the-right-place-but-makes-no-economic-sense. The punitive part is what makes the second part actually happen - otherwise no sane business would do it in the first place.

And to say that conservatives are doing nothing but blaming poor folks for this whole mess is just propping up a straw man argument because we aren't blaming poor people. The myth is perpetuated because I believe it makes them feel good because it's apparently God-given fact that conservatives hate poor people. I'll not get into my personal experience here, but I just don't think that joke's funny anymore. But, you'll be happy to know you got my dander flaring, so smirk up. The sad part about this is the people loosing their homes because they were taken advantage of by the mortgage companies, security traders, and banks, enabled by CRA.

I'll leave with this. I had a professor who is nearing his 90's. I took two classes with him, Oil & Gas Law and Federal Procedure. He often would talk about God, how women can vote now, and when he was the mayor of Bellaire, and that he's been a life long Republican and never thought he'd see a black man in the white house. I can picture the uneasy smiles of my fellow, female and minority, students. So, you can image everyone's surprise when he said that as long as we've got the death penalty, we might as well just use it on Berney Medoff. Why am I mentioning this? Because even the staunchest of conservatives think the "shitbags" on Wall Street are mostly to blame for this mess. But, please, let's not keep supporting bad laws in the name of "liberalism" via CRA.

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