Initially, absolutely yes, it was against their will. Banks fought with bank examiners for years over compliance with the CRA. My bank was told it had an unsatisfactory CRA rating which would likely cause it to not obtain approval for any additional branches nor would we be able to buy additional banks.

So we caved in.

Later when the ratings agencies kept rating MBS AAA, banks realized they had an escape hatch to off load the crappy loans.

That made the bank examiners happy, stockholders happy, borrowers happy and politicians happy. You were probably happy then, too, knowing that you and any crappy borrowers could live in $250,000 houses.

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Posted by ShortyRob

Member since Oct 2008

82116 posts

Posted on 7/3/14 at 11:32 am to LSURussian

quote:
Initially, absolutely yes, it was against their will. Banks fought with bank examiners for years over compliance with the CRA. My bank was told it had an unsatisfactory CRA rating which would likely cause it to not obtain approval for any additional branches nor would we be able to buy additional banks. So we caved in. Later when the ratings agencies kept rating MBS AAA, banks realized they had an escape hatch to off load the crappy loans. That made the bank examiners happy, stockholders happy, borrowers happy and politicians happy. You were probably happy then, too, knowing that you and any crappy borrowers could live in $250,000 houses.

I can still remember all the bull shite news stories about "red lining" which amounted to people bitching that blacks with shitty credit couldn't get loans.

Basically, the threatened banks with extinction if they didn't loan to people who had no business getting loans and then, as those loans began to stink, they rated MBS in such a way that only an idiot wouldn't take advantage.

Then. Viola'. They threw their hands up and said "what, we had nothing to do with it!!!"

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