Talk:Community Reinvestment Act

Changes and edits

I'm glad to see that this page has been edited a fair amount since I last visited the article. Last time I visited this page I thought it was very strange to see a strong bias in the article, with statements written in bold/italics as if someone was trying to say that certain facts were more valid than others (under the "Relation to 2008 financial crisis" section).Arandomwikiguy (talk) 11:54, 2 July 2009 (UTC)

CRA as purported cause of the housing crisis.

I have made several changes: 1) fleshed out the commentary of FDIC chair Sheila Bair and the remarks of Fed Governor Grosznor who both relay extensive evidence against the proposition that the CRA was a significant cause of the housing crisis. Bair's remarks are unequivocal and deserved to be quoted. 2) removed an irrelevant citation from the section of people making the charge. I read the article, and it was almost entirely about blaming Freddie and Fannie for the crisis. It mentions the CRA once and presents no evidence (nor makes the claim) that it caused the housing crisis. 3) added 2 citations by Paul Krugman who has been especially vocal in refuting this idea. I trust he is "noteworthy" and his opinion on the matter is worth including.

In general I think the whole section is too long, relies too much on listing people on each side of this nonsensical debate, without stating more emphatically that this is not an idea taken seriously in economics. Aside from some opinions of right wing economists, there is no empirical data presented to make this case. It is simply an ungrounded hypothesis, plausible in the abstract but completely speculative. It turns into farce when all the available hard evidence shows the hypothesis to be false.--FNV (talk) 03:38, 18 February 2010 (UTC)

A few notes:

a.) Does anyone know where we could find the hard data/statistics that breaks down mortgage loan default rates among CRA-backed sub-prime loans vs non CRA-backed sub-prime loans or other non sub-prime loans? I've checked the Harvard database and it is pretty complex, I wouldn't mind seeing someone break down some numbers for the general population.

b.) I have personally found Paul Krugman's assertions with regards to current economics and politics to be of dubious worth. One reason the NYT and Obama administration love giving him so much exposure is because his column/articles always support increases in governmental power over the economy. Strangely enough this is not what he won the Nobel Prize for. His 55% quote is completely irrelevant considering he was talking about current loans a year after the initial market drop had occurred. Whether or not the CRA caused the collapse means the data we want would be from months leading up to collapse, not a year after when all markets were hurting from the overall economic collapse. Also he unfortunately cites data that is closed off to the general public (Wall Street Journal) which, if he were a Wikipedia contributor, would not be a valid reference.

c.) Opinions of people at the Federal Reserve and government agencies are suspect. Of course someone at working for the government is going to say that the current crisis is NOT the government's fault. Unless they give hard data to back up their claims then they should not be quoted in this article.

d.) Are the claims that the CRA didn't contribute to the collapse of 2008 contradicted by the earlier statements regarding CRA loans and Freddie Mac in the 3rd paragraph of the "Sound Practices and Profitability" section?

What we need to find is a good study showing whether or not CRA loans to low-income and other demographics had a higher instance of default than non-CRA loans. Right now the "Relation to 2008 Financial Crisis" is about 20% supporting the assertion that it helped contribute the crisis and 80% opposing which violates NPOV. Fatrb38 (talk) 06:27, 13 July 2010 (UTC)

I added many of the sources to this section. If you want data, one source that's better than most is the Traiger Hinckley study. Check it out and get back to me. The government does not seem to be lying when it says the empirical data does not support a connection. II | (t - c) 07:59, 13 July 2010 (UTC)

I just made a few changes to the section on CRA and the alleged connection to the crisis. There are many critics of CRA, but only a few had been noted, so I added a few more. Also, check out the Krugman reference, which is pretty simplistic. It comprises 145 words (3 short paragraphs) and it only notes the existence of a commerical loan bubble and the deflation of that bubble. So what? Krugman doesn't address the commercial loan delinquency rates, and he fails to note that there were huge differences in the collateral requirements of residential and commercial loans. While residential loans were backed with little or no down payments, commericial loans generally had 20 to 35%. The reason we had a crisis (in the view of people like Peter Wallison of AEI) is that residential loans were backed with crap, people could walk away, and that led to bank failures. A lot of commerical loans may be underwater now, but that doesn't mean that the businesses taking out those loans are able to walk away from their obligations. If Krugman has addressed this issue in a more complex manner (and I doubt it) please make the appropriate adjustments. Thanks. Nicholas007 (talk) 23:53, 26 December 2012 (UTC)

I just made one more change, which was to remove this statement: "Legal and financial experts have noted that CRA-regulated loans tend to be safe and profitable, and that subprime excesses came mainly from institutions not regulated by the CRA." I removed it because it is a sweeping statement, and it is not specifically supported with a citation. Also, a statement asserting the exact opposite is just as true. I could say: "Legal and financial experts have noted that CRA-regulated loans have not been safe and profitable, and that subprime excesses came mainly from institutions regulated, directly or indirectly, by the CRA." (The reference to indirect regulation is to acknowlege that 75 nonbanks voluntarily agreed to be subject to the CRA standards (after some arm-twisting by HUD.)The point is that there are experts lined up on opposing sides of this issue.Nicholas007 (talk) 00:05, 27 December 2012 (UTC)

A new study “Did the Community Reinvestment Act (CRA) Lead to Risky Lending?” by Sumit Agarwal, Efraim Benmelech, Nittai Bergman, Amit Seru (discussed here, for example New Study Finds CRA 'Clearly' Did Lead To Risky Lending) finds that it was not a cause of the crisis, but clearly amplified the problem. CWuestefeld (talk) 14:44, 23 January 2013 (UTC)

Mis-use of Wikipedia

I have become concerned of late about bias in Wikipedia. Frankly, for 10 years I've been impressed as to how well it worked, and has worked - and have been a repetitive, although not prolific or frequent contributor. In cases where my contributions weren't good they were deleted. In cases where they were good, they were improved. Everything as it should be.

I'm concerned that the NPOV and anti-bias rules can't be maintained, and have seen some troubling things lately (from moderators as well as well as normal contributors.) I don't know that any policy changes are appropriate. Wikipedia's weakness - that it can be changed by anyone, for whatever reason - is also it's strength, of course. Anyway, this youtube video is worth watching, for any concerned about the future of Wikipedia:

http://www.youtube.com/watch?v=TxgSubmiGt8

To the honest founders, moderators, editors, and contributors of Wikipedia - You've made a great resource, and shown me that such open collaboration can work. Thank You. —Preceding unsigned comment added by 97.89.22.141 (talk) 14:45, 25 June 2010 (UTC)

Agreed! It seems that this article has a large amount of bias toward proving that the CRA had nothing to do with the housing crisis, and none of the editors really seem interested in rebutting such arguments. The inference that ACORN or other low-income housing groups tried to prevent sub-prime lending (except, perhaps, where such sub-prime rates were higher than normal) is laughable, as encouraging low-income (which most often means sub-prime) housing is ACORN's and related groups' stated goal. —Preceding unsigned comment added by 71.11.175.42 (talk) 21:56, 15 July 2010 (UTC)

independent mortgage company statistics

I would like to add a citation relating to the following references.

He noted that approximately 50% of the subprime loans were made by independent mortgage companies that were not regulated by the CRA, and another 25% to 30% came from only partially CRA regulated bank subsidiaries and affiliates. Barr noted that institutions fully regulated by CRA made "perhaps one in four" sub-prime loans, and that "the worst and most widespread abuses occurred in the institutions with the least federal oversight".[114]

These quotes are accurate, but they imply that loans issued by independent mortgage companies are in no way related to the CRA. Independent mortgage companies arrange loans for CRA regulated banks. Hence, the regulations of the CRA would apply to these mortgages, as they would to any other, owned by CRA regulated banks, regardless of the fact that the loans originated at independent mortgage companies. To cite these statistics as somehow showing no link between the CRA and loans made by independent mortgage companies is misleading, and does not tell the whole story.

I am trying to add a comment that, at least, points out that CRA regulated banks fund loans from independent mortgage companies, and says nothing further. It would take more data to show whether or not the loans resulting in CRA credit for banks had a higher default or foreclosure rate. However, at the same time, it takes more than these statistics shown to unlink the CRA from loans made by independent mortgage companies.

This issue is independent of assigning causality of the financial crisis to the CRA. It simply gives these statistics more clarity. —Preceding unsigned comment added by Voightkampf (talk • contribs) 05:56, 22 August 2010 (UTC)

Actually, these quotes may be a logical fallacy, and should just be removed instead of clarified. If the point of these quotes is to show that sub-prime loans were largely not under the CRA, then this is a logical fallacy. This is equivalent to saying that, since member A is in set B, then it is not in set C, where A is a sub-prime loan, B the set of loans made by mortgage companies, and C is the set of loans regulated by the CRA. Clearly, one can construct a Venn diagram in which sets B and C intersect, and A is a member of both. The argument is only valid if you show or assume that no member of set B is a member of set C, i.e., that B and C do not intersect. In this case, for the point to be valid, it must be shown that these sub-prime loans made by independent mortgage companies were not arranged for or purchased by CRA regulated banks. No such assertion is made. As such, these statistics communicate very little meaning, and should probably be removed, instead of clarified. —Preceding unsigned comment added by Voightkampf (talk • contribs) 08:07, 22 August 2010 (UTC)

All well and good but Barr didn't absolve independent mortgage companies from affecting CRA ratings of host institutions rather points out the flaw in the regulatory structure that allowed the collusion to go unchecked. Your point implies that the primary motivation was not the over-exaggerated bundling and leveraging of mortgage backed securities by the majority of financial institutions in question here but the obtaining of an artificially inflated CRA rating by said institutions was the driving factor instead.

Before the National CRA Aggregate Report at FFEIC went down, it was fairly clear to see that CRA measured institutions, for the most part & even in key MSAs, were consistently no where near falling short of CRA compliance for a decade or more. Any collusion between key financial institutions and independent mortgage companies operating together with unsound business practices in play that happened to bring along it some padded or artificial CRA "points" was minor compared to the securitization and subsequent leveraging boon, if any benefit at all.

This entire CRA-is-to-blame talking-point is politically driven rather than fact based (various Housing and Community Development Acts over the years set the percentages for low and middle income lending; not the CRA) and, in my opinion, the connection between the obligatory CRA examination & rating as a major factor in this latest financial crisis is flimsy at best. It really has no place here, but such is the nature of community consensus I suppose <groan>. George Orwell III (talk) 08:54, 22 August 2010 (UTC)

My goal here is to discuss the presentation of these statistics specifically, whether or not they are presented in a clear way, and whether or not they should be clarified or removed. I do not think this should be a function of consensus as to what extent we think the CRA contributed to the housing crisis. If we're going to cite experts and paraphrase statistics and arguments for either side, we should present them in a clear context, or not at all. Saying that an expert says that the CRA is not to blame, and then citing the independent mortgage loan percentage of sub prime loans merely points out that many loans originate by mortgage companies and not at banks, nothing else. It is a statement that has no relevance to the CRA, since those loans were very possibly arranged for CRA regulated banks.

In fact, Countrywide Home Loans had a CRA program specifically oriented towards making loans for low-income people and selling them as mortgage backed securities to banks for CRA credit. Here's a quote from Countrywide's old website:

"Countrywide's goal is to meet the Six Hundred Billion Dollar challenge, funding $600 billion in home loans to minorities and lower-income borrowers, and to borrowers in lower-income communities, between 2001 and 2010. As of July 31, 2004, the company had funded nearly $301 billion toward this goal. The result of these efforts is an enormous pipeline of mortgages to low- and moderate-income buyers. With this pipeline, Countrywide Securities Corporation (CSC) can potentially help you meet your Community Reinvestment Act (CRA) goals by offering both whole loan and mortgage-backed securities that are eligible for CRA credit."

So, presenting statistics like this implying that mortgages originated by mortgage companies like Countrywide were never regulated by the CRA is fallacious and misleading. I would argue more in favor of their removal than their clarification, since these statistics give the wrong impression to readers who are unfamiliar with the relationship between mortgage companies, banks, and the CRA, and since there is no effort spent pointing this relationship out, along with these statistics. —Preceding unsigned comment added by 208.127.232.30 (talk) 21:09, 22 August 2010 (UTC)

Please keep in mind that any arguments made in the article MUST be attributable to a reliable source, synthesis and original arguments to justify a point are not allowed. It is also inappropriate to remove material that has been properly cited to reliable sources, based on synthesis and original arguments of the editor him/herself. LK (talk) 03:42, 23 August 2010 (UTC)

That is all well and good, Lawrencekhoo, but you keep removing any attempt to point out that mortgage company loans end up under the CRA if they are arranged for or owned by a CRA-regulated bank. This is material that is properly cited to a reliable source. Would you permit this factual addition that clarifies statistics already in this document under a different citation? It is a fact that mortgage loans from mortgage companies fall under the CRA when they are purchased either as a whole loan or a mortgage backed security by a CRA-regulated bank, and a critical one to understanding the independent mortgage loan statistics. It's not a fringe view that gets undue weight by mention with these statistics. Is there some format in which you would allow this additional fact? —Preceding unsigned comment added by 137.78.133.248 (talk) 20:33, 23 August 2010 (UTC)

I'm starting to agree with George Orwell III, and with earlier topics on balance. This section spends several paragraphs not only citing experts deemphasizing the role of the CRA with sub-prime mortgages, but actually delving into their arguments for why they don't think it matters. The alternative viewpoint is only mentioned in a few sentences, citing experts with no statistics or arguments. If one side of this issue is such a fringe view, or if we are only going to establish one side but not the other, perhaps we should just remove the entire section for balance issues. Or limit this section to one paragraph emphasizing influence of the CRA's influence, citing experts, and one paragraph deemphasizing the CRA, citing experts, with no statistical breakdown supporting either. See Wikipedia:Neutral point of view.

---

In this whole section, I see only one reliable secondary source which bears directly on the question of CRA's involvement in the crisis; namely, the BIS working paper, which concluded (in a footnote) that the CRA did not play a major role. Other than that, I see a lot of original research (people taking papers on other topics and asserting that they support or refute CRA as a cause of the crisis), plus an assortment of opinion pieces and unsupported statements from people whose econ credentials range from the impressive to the nonexistent. Ron Paul as an authority on economics? Really?

I propose whacking the whole section except for the introductory paragraph and the conclusions of the BIS paper. Then let anyone with additional reliable secondary sources, on either side, put them in. If there is a real debate going on in mainstream economics, then such sources ought not be hard to come by. On the other hand, if all available RSSes refute the claim of CRA being involved in the crisis, there is no need to give undue weight to the opposing view. Dausuul (talk) 16:03, 1 September 2010 (UTC)

New scrutiny

Recent ~14 May 2011 addition....

The Obama administration has increased scrutiny of the provision of credit to poor and African American neighbourhoods. Lenders have come under investigation for not operating in such areas, whether they have halted service there or have never operated in them before.^[78] Atlantic financial editor Daniel Indiviglio attributes increasing noncompliance with the CRA to tightening lending requirements.^[79]

The italics (my emphasis) gave me a clue to what may be the real driver behind this & it has not been reported yet as far as my searching for straight article goes.

The instance mentioned in the Atlantic piece referring to a Bloomberg report of a bank in St. Louis being suddenly in non-compliance most likely never bothered to adjust their practices in light of the post 2010_Census' LMI zone changes within the long established Census tracts leftover from the 2000_Census based ones. Checking old map and data for St' Louis against the 2010's latest did indeed show the shift -- indirectly altering the old "community-to-service" lines to a somewhat economically different one if not just geographically "redrawn".

I just haven't found a way to incorporate this dynamic of 'Census tract change oblivious banks' possibly contributing to the percieved increase in recent scrutiny without it being shot down as original research. Thought I'd mention it here so it has a chance of being supported with a credible citation some day. -- George Orwell III (talk) 05:19, 14 May 2011 (UTC)

Removal of Relation to 2008 financial crisis section

The "CRA caused the 2009 housing bubble" talking point has no credibility. Why is this conspiracy theory even included in the article? Ron Paul is not an economist, why is his opinion in the article? I understand wikipedia should avoid bias, but including this article is like reporting on the issue of big foot as follows: "Biologists say big foot is a myth, but others say he is real." In other words we are sacrificing accuracy for "fairness" and "sympathy" to those of a certain political persuasion. 99.169.66.28 (talk) 01:25, 28 December 2011 (UTC)

This isn't bigfoot hunting, and the NBER isn't Ron Paul. A new study “Did the Community Reinvestment Act (CRA) Lead to Risky Lending?” by Sumit Agarwal, Efraim Benmelech, Nittai Bergman, Amit Seru (discussed here, for example New Study Finds CRA 'Clearly' Did Lead To Risky Lending) finds that it was not a cause of the crisis, but clearly amplified the problem. CWuestefeld (talk) 14:47, 23 January 2013 (UTC)

Unfortunately, even patently untrue theories (like the water fuel cell for instance) can still generate enough attention to be notable. This particular right-wing talking point has generated enough attention that leaving it out would mean that the article did not appropriately cover this subject. LK (talk) 05:37, 24 January 2013 (UTC)

Some Relationships between the Community Reinvestment Act and the 2008 Financial Crisis do not make much sense

Isn't the idea that the Community Reinvestment Act had something to do with the Financial Crisis this? The Federal government dragged lenders kicking and screaming to make subprime loans to minorities. Lenders knew such loans were a poison pill. So why would those not under the Act take upon themselves to make such loans unless they had negotiated sufficient payment from regulated lenders to avoid later bankruptcy? Even more problematic, you can infer from the Countrywide ad it first made the loans and then was trying to find regulated banks to negotiate with. Rdengrove (talk) 18:51, 2 September 2013 (UTC)

Conservative belief #1: There are no racist circumstances that could hold a person back, if a minority works hard they can make it. If I was a black person, I would do just fine because I would make the correct decisions, in fact I would be advantaged because the real racism is to benefit black people

Conservative belief #2: It's perfectly OK for banks to not lend up black people, they're not being racist, all money is green, they just want to protect their profit.

It's kind of astonishing the internal mental dissonance it would take to simultaneously hold these two beliefs, isn't it? Like let's imagine that in your world, you're black, you're walking around getting all those advantages of being a black person right but make correct, white protestant life choices. Now imagine yourself walking into a bank, you ask for a loan. The bank officer looks at the color of your skin, and denies you, after all, lending to black people is unprofitable, just their own self interest, no harm done. While living a life with such circumstances, forbidden from something at basic as access to credit, do you somehow still imagine yourself being advantaged and doing just as well as you are now? Is it somehow all your own personal responsibility that can be overcome with a little elbow grease, that even without the ability to obtain a mortgage, since the bank is just acting in its own financial self interest right and not lending to black people, and lucky you in this scenario are one of the blacks, do you imagine yourself owning a house and other basic things due to gumption?2601:140:8900:61D0:95BA:C4D3:8F39:9E5 (talk) 16:02, 4 November 2021 (UTC)

ORweasely

Most experts on the subject,...hold that the CRA did not make a significant contribution of the subprime crisis. I suggest we remove this as OR and weasel wording. None of the sources in this sentence support the statement. a reader may incorrectly believe economic experts were polled and the majority agreed, instead an editor has found 3 economist who disagreed with one economist. Darkstar1st (talk) 07:16, 28 October 2013 (UTC)

Give me a bit of time to find something. I think I've seen reports from investigatory committees about this issue, and they found the CRA is not a factor in the housing bubble. 123.203.195.18 (talk) 14:14, 1 November 2013 (UTC)

Latest addition has "poor" sourcing

Addition in question

An investigation by a major newspaper found that "The City of Cleveland has aggravated its vexing foreclosure problems and has lost millions in tax dollars by helping people buy homes they could not afford." The newspaper added that these problem mortgages "typically came from local banks fulfilling federal requirements to lend money in poorer neighborhoods." In his book on the crisis, CPA Joseph Fried notes that many of the loans given in the Cleveland program - including a loan to a woman living in a car - would be counted as "prime" by CRA advocates. This is, according to Fried, because many notable CRA proponents, including Janet Yellen, Randall Kroszner, John C. Dugan, and Elizabeth Warren, treat all loans as prime provided they have stated interest rates no higher than 3 percent above average. Fried added that, since many loans related to government programs carry low interest rates by design, the 3 percent method makes them appear better than they are.

Not only is there a sourcing issue to the above but I don't see how Cleveland translates into the entire affected sector in question never mind what/how the 3% thing "fits" into any of this (if at all) in the first place. -- George Orwell III (talk) 01:38, 13 December 2013 (UTC)

CRA relation to crisis changes

George Orwell wanted to know how the "3% thing" fits into this. Many of the defenders of CRA, such as John Dugan, Randall Kroszner, Janet Yellen, Eric Rosegren, Richard Neiman, and Elizabeth Warren, defined the quality of loans (prime vs. subprime) on the basis of interest rates rather than the credit-worthiness of the borrower (which would be the normal and conventional way to do it). These people declared that any loan with a rate 3% or more over the normal rate must be "subprime," and any loan with a rate lower than that must be "prime." This was a self-serving standard for government advocates to use since many government home loan program involved low rate loans - even if made to people with subpar credit. The quote from the Cleveland Plain Dealer and from Fried's book on the financial crisis is important because it informs people about this matter. (Eg, the loan made to the woman who lived in a car was considered "prime" because the interest rate on the loan was not excessively high).

I was surprised and dismayed to see the recent removal of Krugman's canard about commercial real estate loans. Let us keep it, but with the counterpoint (I added) that puts it in proper perspective.

If you don't like a citation don't remove it. Rather, add your own to counter it. Nicholas007 (talk) 05:41, 13 December 2013 (UTC)

I believe your additions keep getting removed because, for starters, both citations associated with the added material are not easily verifiable - do you have something with a working link? - followed by, imo, because it belongs in the Subprime mortgage crisis article more so than the CRA article (if anything). You've kind of synthesized these portions (hidden in the section above) to "fit" into the notion that CRA covered loans that were eventually securitized made up a larger share than the roughly ~6% of all the loans in question. Sorry, I just don't don't see how "prime" or "sub-prime" nuance, even if absolutely true, ultimately matters here - are you saying only "true-sub-prime" loans were counted towards CRA evualations and the "faux-prime" ones were not? -- George Orwell III (talk) 09:10, 13 December 2013 (UTC)

I think I understand the point Nicholas is trying to make. If we are going to cite people like Dugan, who claims that CRA did not significantly contribute to subprime lending, we ought to know how Dugan defines subprime vs. prime. However, I also agree with Orwell that the presentation was a little confusing. I think the very latest version is a big improvement.Georges1254 (talk) 14:50, 13 December 2013 (UTC)

I think it's pretty straight-forward now - the assertion is claiming "near-prime" (or Alt-A) loans need to be counted separately in the accounting concerning the nuances between "prime" and "sub-prime" calculations, etc. While technically a valid point, in the overall picture & at the time in question - even with the worst case estimates for that "near-prime" class - it would still only shift the data roughly ~4% or so. So if you accepted that CRA qualified loans made up ~6% to ~7% of the total number of loans eventually securitized under the "bubble", using the new sub-class with worst-case accounting would only shift that baseline to ~10% or ~11% (again, assuming all of those can be counted towards CRA evaluation/rating as well).

That said, I still don't see how splitting this particular hair changes anything and would now justify inclusion in the article. Quite the opposite - this nuance belongs in one of the several other articles that fall under this "financial crisis" umbrella (if at all) and, more importantly, the references are lacking the support needed to avoid the perception of synthesized content - especially after locating the How Cleveland Aggravated Its Foreclosure Problem and Lost Millions in Tax Dollars - All to Help People Purchase Homes They Couldn't Afford piece - which seems to be all about secondary loans once a mortgage was secured (secondary home/flipping?). -- George Orwell III (talk) 04:55, 14 December 2013 (UTC)

I'm going to remove anything cited to a source that doesn't mention the CRA in the source. Read WP:SYN, you cannot 'rebut' what is in the article if an RS has not already done so. Doing that is original research. Darx9url (talk) 08:06, 15 December 2013 (UTC) Also, I'm removing stuff that's not sourced to a WP:RS. Darx9url (talk) 08:10, 15 December 2013 (UTC)

Due and undue weight

Editors here need to read the policy on balance and giving material due and undue weight. Essentially, arguments and opinions should be giving weight in the article depending on their prominence in reliable sources and the prominence of the person(s) making the argument. The section on the CRA has become unbalanced recently. When the views of the Federal Reserve is given a brief sentence, and the views of someone not notable enough for a Wikipedia article is given an entire paragraph, there is something wrong with the weight in the article. Also, please don't include extended quotes, paraphrase the arguments and attribute them, don't state them as facts. Thanks, LK (talk) 06:02, 16 December 2013 (UTC)

Two important matters have been airbrushed from this article: 1) Krugman's statement exonerating government programs on the basis of difficulties with commercial real estate loans and 2) the conflation of "high interest loans" with "subprime loans." Someone reading the article, as it now exists, would not have a clue that these are controversial matters. (Krugman ignores evidence showing that commercial loan problems developed after the crisis; and the use of the high-interest proxy is a brand-new creation, developed by affordable housing proponents after the crisis occurred.)

I will be putting back into this article information that will let the reader know that these two issues exist. I absolutely welcome and encourage you to add all the rebuttal you want. If you feel a Krugman is worth 5 times more print than a "Fried," so be it. I have no problem with that. But, I will not allow entire controversies to be removed, without a trace.Nicholas007 (talk) 11:35, 16 December 2013 (UTC)

But neither point 1 nor point 2 need to be here - sure; absolutely belong under the sub-prime crisis or the housing bubble or one of the many other more relevant (& more appropriate) articles - to the extent they currently are (if at all) but not so much here. IMO, you're just confusing the potential reader with a Christmas tree of tangents to the main subject matter, the CRA. Trying to "wedge" this material into as many places as possible that happen to relate to or touches upon one 2008 crisis topic or another is just not constructive for the CRA article (in general). And I don't think the Krugman portions dealing with such tangents, as the commercial thing is im my view, belong here either.

The other remaining concern still hinges on the appearance of WP:SYNTHESIS taking place here - albeit more clear to me now that I've been pretty much forced to read most of Fried's book while digging for links & similar fix-ups in our citations. Its "synthesis via proxy". Fried takes a 3rd party article, report, etc., properly cites it, and arrives at his own conclusions based on that referenced work. You come along, cite Fried's systhesis of conclusions based on the 3rd party info, cite his original source as well, but there is a disconnect between the original, his synthesis and the presentation of it here at the end. In a nutshell; if the info added to an article can be found at the original source that Fried cited in his book - just leave Fried out of it & use the original source (after you've double-checked Fried of course), so folks won't get the impression that by doubling up on Fried's citations you are synthesizing using Fried as a proxy... and it all looks very legit because most of sourcing that I've seen here & elsewhere is woefully lacking in actual working links for the reader to reach there own conclusions, etc.. -- George Orwell III (talk) 12:41, 16 December 2013 (UTC)

Krugman's statement and the stuff following may fit in a blog somewhere, but it shouldn't be here. Some of the other stuff bears trimming too. This is article is about the CRA legislation, let's keep it on point folks, and not let it become a WP:COATRACK. LK (talk) 08:30, 17 December 2013 (UTC)

Let's not use high Wiki source standards as an excuse to purge articles of inconvenient viewpoints or eye-opening controversies. No one had a problem with ("Nobel Laureate") Krugman's misleading comment about commercial loans until holes were poked in it by subsequent critiques. But, the fact that Krugman is a misleading partisan, in my opinion, does not mean his viewpoint should be erased. Let people see his comments and the rebuttal comments, so that they can decide the issue for themselves. And, if you support his view, reinforce it with more research. Simply erasing the whole issue is the easy, but wrong way to fix this. As for the conflation of high interest rate loans with the traditional and true subprime definition (which traditionally was based on borrower FICO and other characteristics - not the loan interest rate), this is an absolutely vital issue that needs to be aired. High estimates, such as that of Pinto and the even higher estimate of the SEC (see Dec. 2011 fraud charges) attempt to use the more traditional definition of subprime. The low estimates are based, in my opinion, on a sham definition. It certainly is self-serving since many of the government affordable housing loan programs kept interest rates within 3% of the norm. Regarding the quality of sources, there is a difference between name dropping and citing quality sources. Many of the CRA defenders cited in this article have impressive titles but zero experience working in or even near the loan business, or writing about it. What books and papers did they publish with respect to this issue? On the other hand, Fried published a book that apparently received accolades from both Wallison and Pinto. On the book cover Pinto states that it was "an impressive research job.. materially adds to the body of research into the role of government affordable housing policy in the mortgage crisis." It also appears, from the cover, that Fried has over 30 years experience auditing mortgage companies. Also, the 2012 NBER research showing that CRA contributed to riskier lending should not have been removed. This research is credible and far more insightful that the little blurbs uttered by some of the ex-Federal Reserve employees, many of whom are covering their butts because they may share some responsibility for the crisis.Nicholas007 (talk) 10:45, 17 December 2013 (UTC)

I am just a Wikipedia watcher (no contriibutions so far) but if this section is supposed to be about the relationship between CRA and the crisis then I think we need to address any issue that might explain why estimates of CRA subprime lending vary so much.Newyorkdandy (talk) 11:37, 17 December 2013 (UTC)

Its the overall policy of promoting homeownership that ties in with what became a financial crisis - the CRA is but a sliver of the policy. I could do without the entire section to be frank but that view was the minority consensus the last time it was proposed a year or two ago so here we are today. The way its presented now, the CRA is the leading gov't policy behind the crisis - again another tangent.

As for any contradictions to standing WP policies - that's the fastest way to get changes implemented/reverted, so please do not revert again without addressing the (at least?) 3 points raised already first WP:SYNTHESIS, WP:UNDUE and WP:COATRACK. -- George Orwell III (talk) 13:11, 17 December 2013 (UTC)

I am beginning to understand the problem, Mr. Orwell. By your own admission, you don't even want this section in. That would be convenient. That way there could be no criticism of CRA, whatever. And, you are erecting a strawman argument when you state that CRA critics are trying to say "CRA is the leading gov't policy behind the crisis..." Where is that stated in this article? But, when there are many contributing factors to a crisis (and most people feel that there are in this case), every factor - even a 10% factor - is potentially important. You have removed important research due, it seems to me, due to your own prejudices.Georges1254 (talk) 13:45, 17 December 2013 (UTC)

Nothing can be further from the truth and what I believe personally is irrelevent. I beleive the section should be Reported relationship to the 2008 financial crisis is all because that is all that we know for sure - what has been proported & reported by x, y or z. To what degree the CRA has/had a role in the overall government policy and to what degree and/or role that government policy played in the 2008 crisis are all subject analysis and varies from one so-called expert to another (the latter is what I believe that particular section in this particular article is not the proper place to address that nuance). Thats all that I really meant & sorry for any confusion it may have caused earlier. -- George Orwell III (talk) 14:12, 17 December 2013 (UTC)

George (Orwell), regarding the issue of synthesis, there was some synthesis in my citations at one point, and I removed it. You will have to be specific if you feel there is more synthesis. As for the issue of undue weight, look above to see my comments. Some of the cited CRA defenders have big titles and zero experience, research or publications. In most cases I have cited people who do have experience, research or publications in their resumes. This issue is highly subjective and I think your own biases are affecting your judgment. Finally, regarding the coatrack, I am not adding lots of redundant comments. In the fewest words possible I am trying to let the reader know that "subprime" is being defined in a most unorthodox manner by some parties. Your deletions are not removing lots of text - just lots of information.Nicholas007 (talk) 14:03, 17 December 2013 (UTC)

Specifically? OK- give me a bit to flush one out for the record but in the interim..... please do not accuse me of letting my personal take on this or anything else inform your reasoning for following plain old WP policy. That is not the case. -- George Orwell III (talk) 14:12, 17 December 2013 (UTC)

So to recap, if you would just take Pinto's piece by itself...

To begin with, the CRA defenders’ claim that CRA lending mostly wasn’t subprime is highly misleading. It would be more accurate to say that 90 percent of CRA lending wasn’t classified as subprime. CRA lenders, along with Fannie Mae and Freddie Mac—the two government-sponsored entities that bought loans from lenders, enabling them to make more loans—commonly classified CRA loans as “subprime” only if they contained such features as high fees, high rates, or low initial payments with adjustable interest rates. But approximately 50 percent of CRA loans for single-family residences were nevertheless made to borrowers who made down payments of 5 percent or less or had low credit scores—characteristics that indicated high credit risk. Whether or not anyone called these loans “subprime,” in other words, the chances are good that many of them have defaulted or remain at high risk of doing so.

... then leave out all of Fried's (pp. 149-150) unsupported sythesis of Pinto's assertions...

...Pinto simply guessed that... Although it was only a guess... goals of the CRA suggest... it would be surprising... Finally, Pinto assumed... I have a certain feeling certain members of Congress et. al.

... and leave the reader with just (p. 150)...

... some of this[Pinto's findings for] CRA subprime lending might have taken place, even in the absence of the CRA. For that reason, the direct impact of CRA on the volume of subprime lending is not certain.

... along with citing the original Pinto piece. This (hopefully) 'points' the reader to the real policy issue [poor tracking of CRA related performance] while leaving out all the highlighted sythesis taking place at the same time. Again, I don't believe anyone had an issue with avoiding redlining on principle and that's really all the CRA deals with. The move to expand what qualifies as CRA countable is part of the overall government policy is the factor worth noting - and THAT is what played a real role in the crisis; the policy - but this isn't the article dealing with the overall policy of which the CRA is only a ingredient of.

Alternatively, we could just amend every instance where the term subprime loan appears with subprime and/or high risk loan -- which would validate the now removed Traiger & Hinckley LLP citation at the same time because its clear we talking about the aggregate number of loans in question [the ones eventually securitized] rather than what label they happen to have been given & by who (also subjective) or when (not definitive).

Does that make things more clear for you? -- George Orwell III (talk) 15:18, 17 December 2013 (UTC)

Yes, that is better. I don't particularly care if it is Fried or Pinto quoted, as long as the issue gets mentioned. I wanted to use Fried because he provided a useful list of the various CRA defenders who use the high interest definition, and because he provided some real examples of subprime loans (like the Cleveland affordable housing loans) that were misclassified as "prime." But, the Pinto excerpt should be fine. Now, since you have held me to such a high standard I decided to look at 3 or 4 of the defender quotes. I found a real mess! Most egregious is the reference to Luci Ellis, which is completely wrong. Go to the cited document and keyword search "community reinvestment act" or "CRA." The only hit you will get is within a footnote on page 5, where Ellis quotes Yellen. In fact, those words attributed to Ellis in the article were uttered by Yellen. In addition I found cases of synthesis. To me it seems that Westrich is simply rehashing Michael Barr, Ellen Seidman, and others. There is nothing new that he is adding. And Aaron Pressman is merely quoting Ellen Seidman, Robert Gordon, and the Traiger & Hichkley law firm. I don't see what he added. Finally, I still disagree with the removal of the Krugman commercial lending quote, and the rebuttal to it. Krugman's quote has been widely quoted for years. It was sitting in this article for a long time and I have had several people quote it to me. Now that there is research available to challenge Krugman's assertion (which he still maintains), I think both sides of this matter should be presented.Nicholas007 (talk) 19:56, 17 December 2013 (UTC)

I'm not surprised the 'other' POV is just as screwy as its opposite has been - I just haven't gotten around to actually fixing-up those yet (largely because, as I mentioned earlier, this section has always irked me even before this latest round of in-fighting took place & have always believed the "best" title for it would have been something like Reported relationship to the 2008 financial crisis for primarily the same reasons you are just now discovering - its all just one speculative "rant" by one side or the other, with little in the way of hard numbers over time that shows what the definitive securitization numbers were. We probably never will thanks more so to Moody's & AIG than the FRB, FDIC, OTS or the OCC).

In short, I find no problem with the whole subprime and/or high-risk loan premise in general & as long they are a result of non-predatory practices - anyone who makes unsound loans should not be surprised if and when they go into default and should gladly go about forclosing on the properties & re-selling them; anyone who finds out they can't afford such loans shouldn't be surprised when they go into default and get foreclosed on. But that wasn't the end of the story like the market re: CRA should normally have dictated (except for maybe the Bank of Beverly Hills - the only financial institution that I know of that really suffered from the so called CRA evaluations by not being able to meet the financial needs of low- & middle-income customers in the communities it served -- they didn't have any & there was no addvocacy group to pawn CRA points off of either). The problem, in my view, was with manner and amount of securitization that took place in spite of just flipping a property until the bank found someone who could make the nut month after month even with changes in the APR.

But back to the point - as I said before (and was misunderstood because it seemed like I was biased [incorrectly] to one POV over some other), the entire section seems inappropriately large (or given UNDUE weight) for this subject matter overall. The solution, imho, is not expanding the section but rather whittling it down to the most general & basic of elements that both stop the piggy-backing from one source to the next as well as isolate the relevance of the CRA as just a small part of a much larger government policy with a much larger aim than just preventing red-lining. Those tangents already exist as stand-alone articles (i.e. not stubs) and, given the level of detail you seem to desire, would make more sense if it could be found in one of those articles. -- George Orwell III (talk) 21:04, 17 December 2013 (UTC)

.

I think the changes I made should not be controversial since I basically followed G. Orwell's recommendations - I think. I took out the erroneous Ellis quote. Did not remove the Aaron Pressman quote but I recommend that it be checked since it seems to merely quote others already cited in the article. I won't add anything about commercial loans as long as Krugman's blurb ("55% of comml loans underwater") stays out. I would much appreciate some guidance as to the format to use for Wiki quotes, especially with web site addresses.Nicholas007 (talk) 00:22, 18 December 2013 (UTC)

I don't know about "not... controversial" since I can't speak for everyone but they sure are in the right, positive direction. And, all things remaining constant, are OK for me. I took the liberty of adding Reported to the section title. If that doesn't sit well for anyone, feel free to change it back (though I'd appreciate an explaination why if so). I also consolidated duplicate refs into a single entry in case it matters.

Not sure what you meant by "some guidance... format... quotes... sites" but if you mean Template usage for citation references, start with Wikipedia:Citation_templates#Examples and then visit the homepage documentation for the specific type of citation template you'd like to learn more about. If you meant something else - please clarify further. -- George Orwell III (talk) 02:05, 18 December 2013 (UTC)

Probably should have, but did not know about the templates. Thanks for pointing me in the right direction.Nicholas007 (talk) 03:23, 18 December 2013 (UTC)

Sub-prime vs. Higher-priced (part 2)

The more I look into the above nuance in the defining and accounting of sub-prime and/or "higher-priced" loans in relation to the CRA & that supposedly never took place - resulting in inaccurate estimates of the actual "volume" of bad loans in question - the less the inclusion of any of it seems warranted.

When I look for this intentional skewing of the numbers in the aggregate accounting via an application of "poor definitions", the closest "guidance" or similar that I could find that was also issued prior to the pre-2008 collapse, is from the FDIC's Advisory Committee on Economic Inclusion (or ComE-IN) issued on July 13, 2007. In that Committee's background summary, it cites, in the very first line of the introductory paragraph, the basis for the three "definitions" that follow were established at least as early as 2001....

"In 2001, the Office of the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision (the Agencies) expanded previously issued examination guidance for supervising subprime lending activities."

That FDIC citation refers specifically to "Expanded Guidance for Subprime Lending Programs", released January 31, 2001, found here in this PDF.

In both 2001 and as late as 2007, it seems pretty clear any loan that was qualified toward the assesment of a financial insitute's performance under the CRA could never be classified as a sub-prime (by definition) because they were excluded from that category (also by definition!). The following definitions are taken from the guidance in question:

1.) Subprime Definition (based on borrower characteristics)

(Exclusions - For purposes of this guidance, subprime lending does not refer to individual subprime loans originated and managed, in the ordinary course of business, as exceptions to prime risk selection standards. The Agencies recognize that many prime loan portfolios will contain such accounts. Additionally, this guidance will generally not apply to:

• prime loans that develop credit problems after acquisition;
• loans initially extended in subprime programs that are later upgraded, as a result of their performance, to programs targeted to prime borrowers; and
• community development loans as defined in the CRA regulations that may have some higher risk characteristics, but are otherwise mitigated by guarantees from government programs, private credit enhancements, or other appropriate risk mitigation techniques.)

The term "subprime" refers to the credit characteristics of individual borrowers. Subprime borrowers typically have weakened credit histories that include payment delinquencies, and possibly more severe problems such as charge-offs, judgments, and bankruptcies. They may also display reduced repayment capacity as measured by credit scores, debt-to-income ratios, or other criteria that may encompass borrowers with incomplete credit histories. Subprime loans are loans to borrowers displaying one or more of these characteristics at the time of origination or purchase. Such loans have a higher risk of default than loans to prime borrowers. Generally, subprime borrowers will display a range of credit risk characteristics that may include one or more of the following:

• Two or more 30-day delinquencies in the last 12 months, or one or more 60-day delinquencies in the last 24 months;
• Judgment, foreclosure, repossession, or charge-off in the prior 24 months;
• Bankruptcy in the last 5 years;
• Relatively high default probability as evidenced by, for example, a credit bureau risk score (FICO) of 660 or below (depending on the product/collateral), or other bureau or proprietary scores with an equivalent default probability likelihood; and/or
• Debt service-to-income ratio of 50% or greater, or otherwise limited ability to cover family living expenses after deducting total monthly debt-service requirements from monthly income.

This list is illustrative rather than exhaustive and is not meant to define specific parameters for all subprime borrowers. Additionally, this definition may not match all market or institution specific subprime definitions, but should be viewed as a starting point from which the Agencies will expand examination efforts.

2.) HMDA "Higher-priced" Loan Data Reporting Requirements

In 2004, lenders started collecting and reporting under HMDA information for "higher-priced" loans by the income-level of the census tract in which the property is located and by borrower characteristics (income, race, ethnicity, and gender). The information is not necessarily indicative of but can raise questions about predatory or abusive lending as well as discriminatory pricing. The data are also useful in determining the availability of different types of credit in neighborhoods.

A loan is "higher-priced" and covered by these reporting requirements only if the spread between the APR on the loan and the yield on comparable Treasury securities is greater than 3 percentage points for first-lien loans, or 5 percentage points or more for subordinate-lien loans. Therefore, while some lenders may have higher-priced loans to report, others may not.

In addition, all HMDA lenders must report: whether a loan is subject to the Home Ownership and Equity Protection Act (a so-called 'high cost" or "HOEPA" loan which may apply based on the interest rate or loan fees); the lien status of applications and originations; and whether the mortgage is for a manufactured home.

The FRB/FFIEC release aggregated data, and data for each reporter, which would include any information on higher priced loans, around August/September of each year for the prior year. The annual release of the data usually results in some scrutiny of the data by media, community organizations and others.

3.) High-Rate, High-Fee, High Cost Loans (HOEPA/Section 32 Mortgages)

The Home Ownership and Equity Protection Act of 1994 (HOEPA). The law addresses certain deceptive and unfair practices in home equity lending. It amends the Truth in Lending Act (TILA) and establishes requirements for certain loans with high rates and/or high fees. The rules for these loans are contained in Section 32 of Regulation Z, which implements the TILA, so the loans also are called "Section 32 Mortgages." Here's what loans are covered, the law's disclosure requirements, prohibited features, and actions you can take against a lender who is violating the law.

What Loans Are Covered?

A loan is covered by the law if it meets the following tests:

• for a first-lien loan, that is, the original mortgage on the property, the annual percentage rate (APR) exceeds by more than eight percentage points the rates on Treasury securities of comparable maturity;
• for a second-lien loan, that is, a second mortgage, the APR exceeds by more than 10 percentage points the rates in Treasury securities of comparable maturity; or
• the total fees and points payable by the consumer at or before closing exceed the larger of $547 or eight percent of the total loan amount. (The $547 figure is for 2007. This amount is adjusted annually by the Federal Reserve Board, based on changes in the Consumer Price Index.) Credit insurance premiums for insurance written in connection with the credit transaction are counted as fees.

The rules primarily affect refinancing and home equity installment loans that also meet the definition of a high-rate or high-fee loan. The rules do not cover loans to buy or build your home, reverse mortgages or home equity lines of credit (similar to revolving credit accounts).

So am I crazy or is that list of "CRA proponents" using some bugus definition as stated by Fried in Chapter 8 of his book, really just following the 2001 established definitions for what constituted "sub-prime" proper & was adjusted further for lender provided additional HDMA information begining in 2004?

Even then, when it came to those "higher-priced" loans, the definition was never as vague as a spread of +3 percent points over "some [private] base interest rate" at the time but the spread between the APR on the loan and the yield on comparable Treasury securities. Fried and his sources seem to be way off in this 'definition' premise, no? -- George Orwell III (talk) 07:19, 18 December 2013 (UTC)

No offense but I do think you may be crazy because what you have written only supports the view of critics, and the need to bring this matter to the attention of Wiki readers. But first, let me point out something in Fried's book, a copy of which I own. On pages 193-195 (chapter 11) he gets into the issue of "predatory" lending and the conflicted feelings of many Democrats and Republicans about it. Government officials did not want predatory lending but they did want subprime, and directly said so. Although many government officials would now deny it, subprime was actively promoted because it was seen as a way to get higher risk (poorer) borrowers into housing. Fried quotes a Fed Reserve governor praising subprime lending despite acknowledging that it was leading to an explosion of housing. This is remarkable because the mission of the Fed is not to promote affordable housing - rather, it is to ensure the financial soundness of banks and other financial institutions. E.g., instead of advocating for low downpayments the Fed should always favor banks to require high downpayments. Other agencies, such as HUD, can serve as the advocates for easy loan terms. On those pages I just cited Fried gets into some of the HOPA changes you have mentioned. Further, I don't think Fried was being evasive or confused when he simply referred to "3 percent over a certain base interest rate." Yes, that "certain base" is the average treasury rate for comparable maturities, but it seems to me that Fried was simply trying to minimize confusing jargon in his book.

Regarding the distinction between high cost and subprime loans I believe you are being much too kind to the CRA proponents in government. Yes, they attempted to add exceptions to the definition of subprime. The exception for community development loans (highlighted by you in bold type) only proves, to me at least, that the government was trying to weaken the definition of subprime so that some affordable housing loans could be exempt. I bet that if Fried had seen these exclusions he probably would have plastered them all over his book, as evidence of the government's role in the ensuing explosion of subprime. And, by the way, the higher risk characteristics of most CRA loans were not "mitigate by guarantees from government programs," etc. If you have evidence to the contrary that would be something very important to add to this article.

Your statement (in your second to last paragraph) defending CRA proponents because they were "really just following the 2001 established definitions for what constituted "subprime"" does not seem persuasive to me - it seems damning. If I implied that CRA proponents were using a bogus definition, I stand by that assessment - the government's rule changes notwithstanding. I never meant to imply that people using the high interest rate definition were being deceitful or conniving - just wrong. Here is an analogy: If we are arguing about violent crime rates, and I say they are rising sharply and you say they are not, would you defend your position by pointing out (correctly, let's assume) that the government changed the definition of "violent crime" a few years back? Perhaps the government did change the definition (in my analogy), and with the new definition the violent crime rate did not rise. However, this would not change the substance of the argument.Nicholas007 (talk) 16:20, 18 December 2013 (UTC)

Look, its more clear to me now that the bulk of this subprime portion of the crisis had to do with the numbers and actions being submitted by Fannie/Freddy that didn't come to light until 2011 & the SEC case. Everything prior to that is pretty much 'good people working with flawed data' on all sides & in all sectors. But the implication from your presentation to this point was that everybody from the Fed Chairman to my local bank teller was intentionally coming up with there own definitions because they ideologically loved the CRA so much they could not resist covering for it by colluding together or something. Baloney - and that's how Fried manages to botch almost every thoughtful analysis he completes; by throwing in opinionated partisan garbage at the end of almost every section he penned.

What he's tried to do is gloss over the fact that, in the end, it didn't matter if the loans counted towards CRA compliance were labeled "subprime" or "higher priced" or "high-cost" - there wasn't enough of these kind of loans in of and by themselves to cause such catastrophic chain of financial events - CRA just does not appear to have been a major driver. And I say that knowing damn well government policies promoting home ownership helped fuel that fire and WAS a major driver ...but that can't hide the fact greed eclipsed sound lending practices more often than not.

Regardless, I no longer support the inclusion of this material here in the CRA article [especially now that its clear the accounting has been 'higher priced' or 'high-cost' & not 'subprime' since at least 2001] and hope the community moves to remove per the same WP:RS, WP:UNDUE, WP:COATRACK & other observations as before. You'd do much better connecting CRA qualified loans in the sub-prime main article as once having met the sub-prime definition and the lack of that inclusion over the past decade or so may have been relevant in the crisis. Its definitely not a two-way street; one is a classification of a type of loan [sub-prime] while the other is a measure used in a mechanism to evaluate a financial institution's performance and/or compliance [CRA qualified]. And while its a bit upsetting actual loan performance wasn't tracked as well as it could have been, it should come as no surprise either. -- George Orwell III (talk) 17:29, 18 December 2013 (UTC)

I find the thrust of your last paragraph to be reasonable, although I would lean towards keeping this section now that it is (in my opinion) more clear and balanced. We took out some of the weaker citations from both sides and we now give the reader insight into these differences in method (and why estimates vary so widely). I do take issue with a couple of things in your 1st paragraph. You say that "the implication from your presentation [my presentation] to this point was that everybody...was intentionally coming up with their own definitions..." I am not sure it was intentional. I think most people were simply parroting each other, rather mindlessly, lazily, or perhaps, politically. Otherwise, how would so many people independently determine that only "6 percent" of CRA loans were high-cost or high-interest? (See Fried's book, page 142 where he quotes those same words from Kroszner, Dugan, Yellen, Rosegren, Silvers, Warren, Neiman, and Gutierrez.) Are we to suppose that those 8 people (and many others) separately researched the issue and calculated the 6% amount? In terms of Wikipedia would these redundant quotes be undue weight and/or synthesis? I don't particularly care if these people were intentionally misleading or not: I just care that they were misleading. And, yes, you are right that Fried is a flame-thrower; however, he has raised some important points, in my judgment. For example, he states that NACA (an activist group) served as the mortgage broker for billions of CRA bank loans, all of which were "prime" if we use the high cost methodology. Yet, "65 percent of NACA borrowers had credit scores below 620 - the lower limit for most banks" (Fried, pg 134). That is well-worth knowing, even if you don't like Fried's bombastic and, perhaps, partisan style.Nicholas007 (talk) 21:12, 18 December 2013 (UTC)

I had observed the compromised worked out by Orwell and Nick, and was reluctantly willing to accept it, but then someone stuck an erroneous quote back in, took a quality quote out (Pinto's estimate of the number of subprime CRA loans), and erased any reference to the conflict between the traditional definition of "subprime" (based on the borrower's FICO, assets, earnings, etc.) and that ridiculous "high cost method," which has nothing to do with the borrower's credit history and earnings capacity. Obviously, none of the CRA advocates has worked in the lending business. Otherwise they would recognize the importance of this matter.Georges1254 (talk) 19:46, 19 December 2013 (UTC)

I'm inclined to agree with the part about the post-discussion changes - the consolidation of refs seemed OK but the reinsertion(s) & removal(s) should have only come after further discussion if at all. I might not have 100% liked were we wound up at the end of the other day - nevertheless it was where "we" (discussion, discourse, debate) found ourselves, so I honored it by leaving it untouched and open to further discussion. Unfortunately, neither side made changes with edit summaries pointing to this talk page nor opened/continued said discussion(s) here. This is a recipe for continued in-fighting and reversion editing; nothing good comes from that. So please, don't feel censored by any of what I just stated; all I'm advocating is taking a respectful extra step and trying to work things out here before making changes that run the risk of being controversial for the benefit of the article & it's potential visitors. -- George Orwell III (talk) 02:27, 20 December 2013 (UTC)

"Higher-priced" is not descriptive but informative

Not sure who added the reference to 2001 "established reporting guideline's definition of "subprime," but that is not at all what the citation said. The citation, to a Fed Press release, was guidance for supervising subprime lending programs, many of which were considered good by the federal government because they could "expand credit access for consumers and offer attractive returns." (See citation 1st paragraph.) However, the definition of "subprime was not changed. In essence, the guidance stated that subprime lending could be a good thing, provided it was not predatory. The definition of subprime, given in the press release, was the traditional one developed by the industry:

The term "subprime" refers to the credit characteristics of individual borrowers. Subprime borrowers typically have weakened credit histories that include payment delinquencies, and possibly more severe problems such as charge-offs, judgments, and bankruptcies. They may also display reduced repayment capacity as measured by credit scores, debt-to-income ratios, or other criteria that may encompass borrowers with incomplete credit histories. Subprime loans are loans to borrowers displaying one or more of these characteristics at the time of origination or purchase. Such loans have a higher risk of default than loans to prime borrowers. Generally, subprime borrowers will display a range of credit risk characteristics that may include one or more of the following:

• Two or more 30-day delinquencies in the last 12 months, or one or more 60-day delinquencies in the last 24 months;
• Judgment, foreclosure, repossession, or charge-off in the prior 24 months;
• Bankruptcy in the last 5 years;
• Relatively high default probability as evidenced by, for example, a credit bureau risk score (FICO) of 660 or below (depending on the product/collateral), or other bureau or proprietary scores with an equivalent default probability likelihood; and/or
• Debt service-to-income ratio of 50% or greater, or otherwise limited ability to cover family living expenses after deducting total monthly debt-service requirements from monthly income.

Obviously, this definition is not the one subsequently used by Yellen et al., so it can't be cited as a new standard. Plain and simply, Yellen, Dugan, and many others asserted that many CRA loans did not have high interest rates. Big deal. That did not make them prime loans. I have re-worded the sentence in a way is fair, in my opinion.Newyorkdandy (talk) 22:35, 20 December 2013 (UTC)

Ummm lets look at the quote in the Yellen citation, 2008 speech (emphasis mine & please note footnote 16)...

There has been a tendency to conflate the current problems in the subprime market with CRA-motivated lending, or with lending to low-income families in general. I believe it is very important to make a distinction between the two. Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans,¹⁶ and studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households.¹⁷

See the term higher-priced? its one of the reportable definitions listed above & was taken from the FDIC (last revised mid-2007). Please note the Exclusion section there - it says CRA qualified loans are generally excluded from being reported as "subprime". So how can Yellen in 2008 be refering to "subprime" when its been excluded? I understand your point but the reporting had changed and "higher-priced" (among others) was adopted nevertheless.

The "higher-priced" term's descriptive nature (adjective-adverb) is misleading; "higher-priced" is a noun (a type or classification of a particular kind of loan - one based on additional HDMA information starting in 2004). The same is true for the HOPEA loan, except that it varies "High-Rate", "High-Fee" or "High Cost". So "Higher-priced" is indeed the term used in Yellen's speech - why? - because that was the guideline at the time period in question.

Now if you go to footnote 16 and look that up ((2007). "The 2006 HMDA Data". Federal Reserve Bulletin, Volume 93. p. A89, Table 9.) - all the info associated with and including table 9 use the measure "higher-priced". This further supports the general guideline dropping CRA qualified from being reported as "subprime" and reported as "higher-priced" (or one of the others defined under HOPEA).

That said - I beg to differ; goverment agencies (and persons like Yellen that were representing them), at least, were not counting CRA qualified loans as "subprime" after 2001 and formalized "higher-priced" instead when surveys included the new fields for it in the 2004 HDMA reporting. This nuance is again affirmed in the 2007 HDMA data...

fn7. Borrowers in the higher-priced market segment generally fall into one of two market categories--"subprime" or "near prime" (sometimes referred to as "alt-A"). Individuals in the subprime category generally pay the highest prices because they tend to pose the greatest credit or prepayment risk. Statistics prepared by the lending industry do not characterize lending as higher priced but rather use the terms subprime or "near prime" (sometimes referred to as "alt-A"). Individuals in the subprime category generally pay the highest prices because they tend to pose the greatest credit or prepayment risk. Statistics prepared by the lending industry do not characterize lending as higher priced but rather use the terms subprime or alt-A. Thus, when presenting data from industry sources on loan performance or other aspects of the mortgage market, this article will often refer to data on the subprime, alt-A, or prime lending market.

Mortgages with annual percentage rates (APRs, which encompass interest rates and fees) above designated thresholds are referred to here as "higher-priced" loans; all other loans are referred to as "lower priced." For loans with spreads above designated thresholds, revised Regulation C requires the reporting of the spread between the APR on a loan and the rate on Treasury securities of comparable maturity. The thresholds for reporting differ by lien status: 3 percentage points for first liens and 5 percentage points for junior, or subordinate, liens.

Further details are in note 12, p. A126, of Avery, Brevoort, and Canner, "Higher-Priced Home Lending and the 2005 HMDA Data."

As you can see, we are basically talking about the same "thing" but in different terms - one used by the commercial sector and the other used by government. Its this nuance that is frequently being missed by all the back-n-forth and getting one side or the other's back up.

Plus, the Pinto nugget about how...

..."approximately 50 percent of CRA loans for single-family residences ... [had] characteristics that indicated high credit risk," yet, per the reporting guidelines in place at the time, were not counted as "subprime" because borrower credit worthiness was not considered.

... is still there but down further, apart from Yellen & the rest anyway.

For these reasons - I've reverted the change. Thank you for taking the time to explain your reasoning here in spite of it all. -- George Orwell III (talk) 00:18, 21 December 2013 (UTC)

As you might guess, I tend to agree with Mr Dandy, although I think an amicable resolution can be found easily. Here is where I believe there is an error. That "exclusion" for CRA loans is not saying what you think it is. Only the tiniest percentage of CRA loans were "mitigated by guarantees from government programs, private credit enhancements, or other appropriate risk mitigation techniques. That clause was not, in my opinion, intended to be descriptive of all or most CRA loans. Rather, it was a qualifying clause that limited the so-called CRA exclusion greatly. CRA loans are simply private bank loans to targeted groups, and as you already know there was very little regulation or reporting regarding such loans. CRA loans are normally not guaranteed, as VA or FHA loans are. However, there are a few exceptions. The Cleveland Affordable loan program cited by Fried probably had some sort of local government guarantee, and I heard of one small rural bank that had its CRA loans guaranteed by a philanthropic nonprofit organization. But those were exceptions. Unless you have some source to support the notion that most CRA loans had such risk-mitigation, you should not claim that the government "says CRA qualified loans are generally excluded from being reported as "subprime."" But, I think this is almost a pointless argument. AS you said, the Pinto quote (below the disputed paragraph) addresses the issue pretty well. I favor the way Mr Dandy said it ("Using a definition of "subprime" that was based on the cost of the loans rather than the borrower's credit ratings..."); however, a compromise might be to simply remove the beginning of that disputed sentence, altogether. We would simply go back to the way the sentence started a long time ago ("Other economists and government officials, including Janet Yellen...").The Pinto quote will then give some perspective to the issue. So, with this in mind, I will make that change and hope it is acceptable to all.Nicholas007 (talk) 03:30, 21 December 2013 (UTC)

I made one additional change to the Pinto sentence, taking out "reporting guidelines in place at the time" and substituting "per the standards used by the Federal Reserve to evaluated CRA performance," which I think is more in line with what Pinto actually said. The Fed had done a study of CRA loans and used this standard. There was virtually no reporting of CRA loans. The reporting referred to was, I think, more to spot predatory practices by banks and mortgage companies, regardless of whether they were making CRA loans.Nicholas007 (talk) 03:49, 21 December 2013 (UTC)

Please add back "... at the time". I ask this because -- while I can't seem to get it across that I agree in principle that modifying the reporting definitions/guidlines (first in 2001 and then again at some point in time for the 2004 HDMA data) is akin to your redifining rape to exclude penetration or however you put it -- you can't seem to understand that the "private" sector continued using "subprime", "near prime", "A-1" and similar because that is what was always considered part of their well-defined regime & practice of sound lending but the "public" sector moved to a different set of terms "higher-priced", "lower-priced", "high-rate", "high-fee" and similar for [ac]counting relief primarily. Not much changed in reality-wise but the point about private sector doing things one way while the government counted & regulated by another way is point that does not seem to be taking here.

If it wasn't true - they wouldn't have started to move towards equitable standards between the two entities post-refinance craze, would they? Obviously the bit about not considering credit worthiness, etc. was valid at one point in time but was no longer the case by the ~2009 fiscal year - which, of course, was far too little too late to have changed the course we were already on. In light of this, its important to note the timeline of events (like at the time, during that period starting in 200x and similar) so I believe "... at the time" is relevent and needs to be added back. -- George Orwell III (talk) 04:42, 21 December 2013 (UTC)

You make a valid point. I concur.Nicholas007 (talk) 13:02, 21 December 2013 (UTC)

Glad to hear that. Ironically, new regs have been finalized (made public on Monday) & they've formalized the term "HPMLs" (Higher-Priced Mortgage Loans) as a part of the change (Effective 1-14-2014). See the PDF that will go to the Federal Register HERE if you're curious. Have a Merry. -- George Orwell III (talk) 13:18, 21 December 2013 (UTC)

Thanks, and Happy Holidays to you and the rest of the Wikipedians.Nicholas007 (talk) 12:49, 22 December 2013 (UTC)

Article to be mined for sources

FYI, Mediamatters has a summary of arguments made in RS against the CRA caused the financial crisis charge: http://mediamatters.org/research/2011/10/11/still-wrong-crowley-revives-myth-that-community/182896

Rv misleading text based on plainly ambiguous citation

• Text rv (emphasis added): "Further, results of a Chicago Fed study failed to support a hypothesis that banks respond to public and regulatory pressure exerted as a result of a downgrade in CRA rating by increasing low-income mortgage lending.

This text implies that the CRA is not responsible, via use or misuse, for lending which would not otherwise have occurred.

• Based on citation whose authors admit (emphasis added):

  We note that our conclusions are based on a sample period during which regulators did not take an aggressive approach in tying CRA ratings to lending performance but rather to the lending process (including documentation of lending programs and efforts directed at targeted markets). This suggests that recent regulatory adjustments that more closely link CRA enforcement and lending outcomes are warranted. Future research over time periods subsequent to our sample period, when the lending test was imposed, is needed to determine the effectiveness of these revisions.

NBER working paper

I reverted this edit adding two sentences about a NBER working paper to the top of the CRA-financial crisis section.[1] The reasons are as follows:

• First, the paper is already referenced in the section in paragraph 4, where it states: "A study by the economists, Agarwal, Benmelich, and Bergman, found that banks undergoing CRA-related regulatory exams took additional mortgage lending risk.[130]"
• Second, the section is currently ordered somewhat chronologically, to inform the reader of how the controversy developed in the press. Putting that paper at the top of the section breaks the chronology.
• Third, putting the paper's conclusions at the top implies that it is the most authoritative. However, it is only a non-peer reviewed working paper. The findings of the Congressional Financial Crisis Inquiry Commission, and of the Federal institutions (such as the FED) are more authoritative.
• Fourth, the addition was worded in a biased fashion, it was not neutrally worded.

LK (talk) 14:36, 22 September 2015 (UTC)

Fine, but if the "findings of the Congressional Financial Crisis Inquiry Commission, and of the Federal institutions (such as the FED) are more authoritative", they are certainly less credible, as quangos of the current administration. Quis separabit? 14:40, 22 September 2015 (UTC)

The Financial Crisis Inquiry Commission was a bipartisan congressional committee. Like Warren Commission on the Kennedy shooting, we should take it's findings as authoritative, speculations otherwise drift into WP:FRINGE territory. Also, the Federal Reserve (who probably have more information about banks than anyone else) concurred with the Commission's conclusion; the chair at the time was Ben Bernanke, who is i) a Republican, ii) appointed by G W Bush. The current Fed chair (a Democrat appointed by Obama) also concurred. LK (talk) 14:49, 22 September 2015 (UTC)

Agree with LK's points - George Orwell III (talk) 22:24, 23 September 2015 (UTC)

perhaps it could be reworded and added at the bottom? Darkstar1st (talk) 10:45, 24 September 2015 (UTC)

Missing citations and bad links

There are a few concerns that I have with this article. The information seems sound and the article does seem unbiased at this point. However, the links to some of the wiki articles are not working. There are also several citation quotes that are missing and labeled as such.

Aemanning (talk) 00:48, 17 April 2017 (UTC)

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