[thechat] Hiding from Elections Now

[Jeremy Weiss]

On Mon, Oct 27, 2008 at 10:04 AM, erik mattheis <zero at gozz.com> wrote:
> Sorry Matt, but you're continuing to posts "facts" at odds with those
> generally in agreement to mesh with everyone elses' reality -
> http://www.federalreserve.gov/dcca/cra/

I think the issue here is that Matt is referring to how things play
out, while Erik is referring to the letter of the law. Often times we
find that something that looks good on paper does not work so great in
practice.

For example, if you're a small bank in a small town and the CRA says
that you can't discriminate against a certain part of town because
it's low income that puts pressure on you and your bank to make sure
you fund a proportionally appropriate amount of loans for properties
in that area. However, because it is a low income area, most of the
people who are interested in buying property there have low income and
oftentimes bad or no credit. So now you in the position of trying to
maintain a balancing act. You have to have some loans on the books to
this area or you'll be accused of being in violation of this aspect of
the CRA. But, very few people who have wanted to buy property in this
area meet your banks guidelines. What do you do?

It's this sort of experiences that I believe Matt is referring to
(correct me if I'm wrong, Matt). Yes the CRA looks good on paper. And
yes it has done a lot to help people buy homes. But, it also can
sometimes (but not all the time) but banks in a situation of having to
choose to make risky loans or choose to risk being investigated for
violation of the CRA.

Sometimes well meaning legislature has unintended consequences.

-jeremy