February 4, 2009

Octuplets: Does purported dad "David Solomon" actually exist?

One of the creepier things about Octomom Nadya/Natalie Doud/Suleman is that she listed as the sperm donor for some of her earlier kids some guy named "David Solomon."

It's perhaps worth noting that "David" is an Anglicized version of "Doud" and "Solomon" is an Anglicized version of "Suleman," which just happen to be the two family names she has used at various times. So maybe there actually is a guy named "David Solomon," but then he'd almost certainly be a relative. Or maybe she just made up the name "David Solomon."

For some reason, I'm kind of reminded of that brilliant / sick-making Heinlein short story about the paradoxes of time travel, "All You Zombies," where one person is his/her own mother, father, son, and daughter.

My published articles are archived at iSteve.com -- Steve Sailer

You can't keep a good Diveroli down

In Miami New Times, Penn Bullock updates us on the latest adventures of Efraim Diveroli, who is back in business supplying ammunition to the U.S. Government, despite being under indictment on 71 counts. He's now operating under the corporate name AmmoWorks rather than AEY. Check out the last line of the article (page 2) for the most acute observation yet on the true nature of young Mr. Diveroli.

My published articles are archived at iSteve.com -- Steve Sailer

Bank of America lauds its $1,500,000,000,000.00 CRA pledge

WaMu's $375 billion in Community Reinvestment Act loans was for pikers! A reader writes:

Here is a direct quote from a full-page ad placed by Bank of America in today's (2/4/09) WSJ under the heading "Bank of America's Promise to America:"

"We began a 10-year, $1.5 trillion investment in low-to-moderate income and minority communities -- the largest investment of its kind in America."

This from a company that would be bankrupt without the government bailout. Smacks of a CRA quid pro quo to me. I wonder who picks up the "promise" on this one.

One-and-a-half-trillion here, one-and-a-half-trillion there, pretty soon ... All I can say is that If Everett Dirksen were alive today, he'd be spinning in his grave.

... Actually, I can say more.

Note that this is a full page ad not in Mother Jones or the New York Times, but in the Wall Street Journal.

You might think that now that Bank of America wants to get even more bailout money from the taxpayers, they'd ixnay mentioning to Wall Street Journal subscribers their earlier promise to lend $1.5 trillion imprudently, and that now they'd instead be talking about how the taxpayers are likely to get their money back in the long run.

UPDATE: A reader comments:

Perhaps their ad in the WSJ was a way of advertising to prospective investors that they were unlikely to be destroyed by discriminatory government legislation.
"Bank Of America: We pay our protection money on time and in full!"

But that's not how the contemporary worldview works. Everybody is a Kool-Aid drinker, including WSJ subscribers. No, trillion in Community Reinvestment Act pledges shows you are a good bank, not one of those evil people who didn't pour hundreds of billions down the CRA rathole. So, your moral superiority makes you worthy of getting even more money out of the taxpayers.

The $1.5 trillion dollar pledge was bragged about April 28, 2008 by B of A executive Liam McGee at a CRA hearing in Los Angeles evaluating B of A's purchase of notorious subprime crater Countrywide (talk about a convergence of the walking undead!). As you might recall, everybody in the world became aware that the housing bubble had popped in the summer of 2007, but nine months later B of A was pledging to pour $1.5 trillion down the CRA rathole. And 9 months later, in 2009, they're paying a lot of money to boast about their $1.5 trillion pledge to WSJ readers.

Now, the government can't force bankers to risk $1.5 trillion. All that the government and the "community organizers" can do is select and nurture a now generation of bankers who think pledging $1.5 trillion to meet CRA goals is a great idea because that's what all the bigshot bankers who got permission to buy up other banks have done for the last 15 years. If you want to be a winner, you play ball with ACORN and company.

Sorry about quoting at length, but if I edited out anything, you'd think I was altering the meaning by removing context. No, it's really this egregious:

$1.5 Trillion Community Development Goal
Our continuing commitment to community development will not waver. As you know, in 2004, we raised the bar when we announced our ten-year, $750 billion community development goal. Today, we are raising that bar.

I am proud to announce Bank of America’s new, and unprecedented, 10-year goal of $1.5 trillion for community development lending and investments. This is the largest community development goal ever by any company in America. In coming years, this goal is certain to enhance quality of life for millions of Americans in need, by:

• helping finance construction of affordable housing throughout the nation,

• providing loans and other needed capital to small businesses,

• supplying consumer loans, including housing finance, for low- and moderate-income and minority borrowers, and

• financing economic development for communities in need.

In addition, our Charitable Foundation is raising its philanthropic giving goal from $1.5 billion to $2 billion over 10 years. This is the most ambitious long-term corporate philanthropic goal ever announced by any company. We are setting this goal despite uncertain economic times.

We are optimistic about the future prospects of the housing market and the enhanced mortgage services Bank of America will offer after its acquisition of Countrywide . In announcing our new, $1.5 trillion community development goal, industry-leading mortgage loan practices and new foreclosure mitigation strategies, we ensure that our customers will continue to benefit from Bank of America’s responsible and principled approach to doing business. We encourage others in the industry to follow our lead.

Andrew Plepler will now give more details on our community development and philanthropic activities.
* * * * *

Andrew Plepler
Good morning. My name is Andrew Plepler. Bank of America’s commitment to strengthening the health and vitality of communities stems from a deeply ingrained philosophy and a long tradition of demonstrating corporate citizenship through community development and philanthropy. In particular, by partnering with nonprofits and community leaders … we concentrate on improving the lives of low- and moderate-income and minority families and neighborhoods.

Our company has received five consecutive Outstanding CRA ratings … reflective of our community development focus. In addition, the Bank of America Charitable Foundation is the second largest corporate donor in the world.

For many years, Bank of America has been recognized for its community development work. The vast majority of these activities are the results of our line of business products and services we provide to customers and communities. In more specific areas of community development, we have leveraged our knowledge and expertise to become a national leader in affordable housing, small business lending and neighborhood revitalization. And, we are recognized for our results in creating sustainable community and economic development through public–private partnerships.

Since 2004, our company has been delivering on an ambitious 10-year goal of $750 billion for community development loans and investments. To provide just a few “proof” points, consider some of our 2007 results:
• More than $100 billion in community development loans and investments to low- and moderate-income and minority families, business and communities;
• Financing, developing and rehabbing nearly 22,000 units of affordable housing;
• $25.6 billion in small business lending and the #1 SBA lender for the 10th consecutive year; and
• Investing more than $84 million in Community Development Financial Institutions.

Because we also believe that affordable, quality rental housing is critical to our national housing stock, we have been a leader in financing to non-profit and for-profit developers. Bank of America remains a strong player in this space and has expanded its capability to direct Low Income Housing Tax Credit investments to ensure continuity and capacity in the market.

In addition to our community development goal, the Bank of America Charitable Foundation set an unprecedented $1.5 billion goal in 2004 for philanthropic giving over 10 years. Since then, we have invested more than $550 million toward increasing the health and vitality of neighborhoods throughout our franchise. Through signature programs like our Neighborhood Excellence Initiative, we are helping increase the capacity of community organizations, develop current and next generation community leaders and create significant impact in the communities we serve.

By supporting organizations such as hospitals, universities and arts institutions, we are helping to create jobs and stimulate economic development to enhance the quality of life in diverse neighborhoods. In addition, our associates provide tremendous support as volunteers in the communities where we live and work.

A local example of a not-for-profit we have supported is Bethel New Life. This organization is empowering individuals, strengthening families and building a sustainable community. Bethel brought in more than $110 million in new investments to a credit starved community and developed more than a thousand units of affordable housing in Chicago’s west side. Bethel’s President and CEO, Steven McCullough attended leadership training and the organization received a $200,000 grant.

Some of our 2007 philanthropic activities include:
• More than $200 million in charitable giving;
• Grants were made to 4,800 nonprofits for education and youth programs, health and human services, community development, arts and culture, and the environment;
• More than 50% of our grants were CRA-qualified, directly benefiting LMI individuals or neighborhoods; and
• Contributing more than 650,000 employee volunteer hours and more than $20 million in charitable donations by associates to help meet pressing community needs.

We recognize the needs are great. We pledge our on-going support – as we have in the past – in addressing community needs, especially in challenging economic times as we now face. To that end, I am proud to announce that the Bank of America Charitable Foundation and Countrywide will provide $35 million in grants and program-related investments as part of our neighborhood stabilization program. These funds will help local and national non-profits engaged in foreclosure prevention and to purchase vacant single-family homes for neighborhood stabilization.

At Bank of America, we have a remarkable franchise dedicated to leveraging our broad national reach … our financial capacity and capability ... and our deep commitment to strengthening communities. We take our leadership role very seriously as demonstrated by our $750 Billion goal for community development and $1.5 Billion goal for Philanthropy. We hold ourselves accountable to create real change, and we publicly report on our progress toward these goals.

I want to give two other specific instances where Bank of America serves as a good corporate citizen.

First is supplier diversity. Bank of America is committed to fostering diversity in our communities and has incorporated that commitment as a core value in our business practices. We developed an aggressive program of outreach and business development to grow opportunities. We are proud that more than 16% of our company’s sourceable spend in 2007 were with firms that are majority-owned by women, minorities or people with disabilities.

Second is the environment. Bank of America is recognized as a leader for its advocacy of efforts to reduce greenhouse gases and support responsible, sustainable development.

We have dedicated $20 billion over 10 years for an environmental initiative to support these efforts. We recently announced that Bank of America has adopted the “Carbon Principles, guidelines for lenders to promote cleaner energy technologies. We also are very proud that our new Bank of America Tower in New York City has been recognized widely as one of the most environmentally friendly buildings in the world.

In short, Bank of America is and will continue to be committed to the communities that we serve. By providing local, relevant support to neighborhoods, we will continue to create opportunities for our customers, associates, and communities to grow and prosper.

We know that we are most effective by partnering with nonprofit organizations and community leaders to identify and address the challenges that together we can overcome.

It's worth rereading to try to figure out how much ends up in the pockets of the "community organizers" that can protest the merger. I don't know, but it's not a small number.

My published articles are archived at iSteve.com -- Steve Sailer

February 3, 2009

A how-to guide to being a Community Reinvestment Act shake-down artist

The Community Reinvestment Act, which authorizes the four federal bank regulators to veto a bank's plan to buy another bank if it's not lending or giving enough money to the right kind of people, is one of those things that sounds too boring to worry about. But, at least 600 outfits of "community organizers" find it fascinating (and lucrative) enough to belong to the National Community Reinvestment Coalition.

Early in this decade, a leftist think tank called PolicyLink wrote up a How To guide to mau-mauing the bank's CRA flak-catchers. I've excerpted a sizable chunk below to give you an understanding of how it influenced who got mortgages and other lending, and to show you the sheer scale and pervasiveness of the CRA once you start looking into it.

As I explained on Sunday, those banks willing to play ball with NCRC, ACORN, Greenlining, the California Reinvestment Coalition, etc., are allowed by the federal government to grow via acquisitions. In contrast, banks that aren't willing to play ball with these racial activists aren't allowed to buy other banks.

Keep in mind, the government and the Obama-style community organizers don't hold a gun to the bank's heads and force them to make stupid loans. If you want to stay small (and maybe get bought up by a ballplayer), you don't have to make stupid loans. But if you want to get big through acquisitions, you have to make the kind of loans that the government and the community organizers want you to make.

Will these politically-preferred borrowers pay you back?

You've got to ask yourself one question: "Do I feel lucky?" Well, do ya, bank?

And banks like Washington Mutual (which pledged $375 billion over 10 years in CRA loans) and Bank of America (which pledged $750 billion in 2004, plus $1.5 billion in charitable donations over ten years, some of which went to community organizers) said, "Why, yes, I do feel lucky." So, they got to make lots of acquisitions ... and wound up losing lots of the taxpayers' money. The more prudent banks weren't allowed to get big through acquisitions.

Not surprisingly, the ballplayers tend to get bigger than the skeptics. Also, not surprisingly, minorities have higher mortgage default rates, and the brokest banks tend to be the biggest banks.

Finally, the CRA changed the worldview of bankers by rewarding the imprudent with approval for their empire-building while blocking the prudent. After awhile, all sorts of people assume that giving mortgages to dubious credit risks must be a great idea because that's what famous bankers with their pictures on magazine covers, like Kerry Killinger of WaMu, do.

Here are excerpts from PolicyLink's how-to guide to exploiting the Community Reinvestment Act, written before the Housing Bubble:

The importance of CRA lies in the fact that regulators do two sets of bank examinations: one for financial safety and soundness, and the other for community reinvestment. Increasingly, this biannual bank CRA examination by federal regulators offers opportunities to comment on the bank's performance to the regulators and open a dialogue with the bank about neighborhood access to capital and financial services or lack thereof.

CRA negotiations are most powerful during a bank acquisition or merger, when the regulators are carefully scrutinizing the bank's activities. The regulators look at CRA, among other issues, in deciding whether to approve a bank application to purchase another financial institution. It is also possible, however, to negotiate CRA commitments when there is no acquisition pending. When well prepared with data, community organizations can use public pressure to convince banks that they can gain financially [and otherwise] with a commitment to a community partnership.

CRA has helped community organizations win increased investments, charitable contributions, branches, and access to loans and financial services. More than $1 trillion dollars has been committed to community investments; the polices and practices of financial services have significantly changed; and the public's and media's views have shifted to support the need for equal access to capital and financial services-largely as a result of CRA advocacy.

Building On Success

Community use of the CRA began as soon as the Act was passed in 1977. Groups such as National People's Action and the Center for Community Change became important sources of knowledge and technical assistance about strategies to convince financial institutions to comply with the Act's provisions.

By the mid-1980s, community groups had successfully negotiated CRA lending, investment, and service commitments that focused on the needs of low-income and communities of color from banks and savings and loan institutions. These early agreements signaled the possibilities for success to other groups across the country.

CRA advocacy intensified in the 1990s with major CRA commitments. In 1992, Bank of America made a $12 billion commitment associated with its acquisition of Security Pacific Bank. The funds were committed for increased lending in affordable housing and economic development and for increased services for low-income consumers. Specific dollar and targeting goals were made for housing, small business, and consumer lending. New products were developed to serve the needs of low-wealth communities. Services were made easier to access by requiring only one form of identification and a small deposit to open a low-cost checking account.

The commitments of large financial institutions can be seen by the brief history below.

Model comparisons

... Some of the questions to survey for include:

Lending Needs

  • What are the business, housing and consumer loan needs of your community?
  • What are banks doing in your community to meet community needs?
  • Are neighbors being approved for loans? If not, is it discrimination or ignorance on the part of the lending institution?
  • Does bank staff go out in the neighborhood to visit community organizations and businesses? Are they learning about community needs?

Investment Needs

  • What investments or charitable contributions would add to the economic vitality of the community?
  • Do community-based nonprofit organizations receive charitable grants from banks?
Like, say, your community-based nonprofit organization?
  • Do community and nonprofit housing development organizations get investment support from banks?

Service Needs

  • What are the neighborhood service needs regarding branches (full service and in-store), technology, mortgage and business counseling, ATMs, etc.?
  • Are there neighborhood bank branches? Are they full service branches?
  • Does the Bank support mortgage and business loan counseling?

Analyze Data back to top

Analyze HMDA data and compare to your community survey data. The following chart comprised from HMDA data illustrates home purchase lending for Oakland, California in 1998.

Comparative Loan Denial Rates for the City of Oakland, California

Reviewing this information reveals inequities:

  • African American households received a proportion of home loans representing less than half their portion of the city population. They were denied loans more than twice as often as whites.
  • Latinos and Asian Americans got loans proportionally less than their share of the population and were denied more often than whites.
  • Applications taken from all people of color were significantly below their representation in Oakland. This means that the results of outreach efforts to potential homeowners of color were not proportionately adequate.
  • African Americans were denied 2.3 times as often and Asian Americans, and Latinos were denied 1.3 times as often as white applicants. This indicates that the bank underwriting process may unfairly judge applicants of color.

These inequities need to be addressed in negotiations. Fairness requires new products that better meet the needs of people of color, true diversity among loan officers, and focused marketing to reach the previously underserved. These needs can also form the basis of letters to bank regulators.

Mount a Campaign

  • Build a coalition to advance your campaign. The broader the coalition is, the greater its power and the more varied the issues upon which it must collaborate. If the coalition is too broad, it may not be able to agree on key issues or tactics. [Like how to divide the loot.] If it is too small, it may have too little power.
  • Prepare a list of community needs and recommendations to bank officials. Advocacy teams should include people with expertise in the issues to be discussed and those whose position or organizational affiliation will be impressive to the banker. The banker is likely to look for areas where bank products can be redirected to avoid negative publicity....
  • Be a persistent, concrete, and persuasive advocate. Financial institutions may not quickly adopt recommendations for new products and approaches to meeting community needs. Bank staff often try to exhaust community activists by extending discussions and meeting dates. Work to understand the financial sector's culture and language and to address their interests and concerns. While bankers may see themselves as open to new opportunities, the educational process takes time.
  • Persuade banks and savings and loans to expand their current lines of business rather than create new lending programs. In other words, if the financial institution does not do business lending, don't expect it to be easy to get them to agree to meet small business credit needs. Demanding new products may not be practical, and alternative approaches should be explored.
  • Explore other avenues if rebuffed by local bank officials, such as assistance from the bank's regulator, or an appeal to the CRA officer at the state or national headquarters of the bank. Obtain assistance from other organizations that have a relationship with the bank. If these methods don't yield results, more aggressive approaches may be necessary.
  • Set minimum goals between the bank and the coalition Understand that the relationship is part of a long-term process. In Stockton, California, activists failed to win an end to the Bank of America's business relationship with an anti-union corporation, but they did secure increased support for local nonprofit groups, increased marketing through local minority-owned media, and continued operation of the bank's branch in South Stockton.[So, who cares about the workers, really? The important thing is that the activists and their media allies got to "secure increased support."]
  • Do not sell the neighborhood (and its potential) short by compromising too quickly with a bank. Identify short- and long-term potential for the community and the bank.

Craft Specific Agreements

To accomplish its goals, a CRA agreement (bankers may prefer the term "community commitment") must contain clear and specific goals. In other words, the agreement or letter from the bank to community leaders must be written in a manner that is measurable and indisputable. It should be filed with the appropriate regulatory agency. Here are some examples regarding language of the agreement.

  • Avoid the general term " affordable housing ," as in "$50 million annually for affordable housing loans." While there is a specific amount of money to be lent over a specific amount of time, there is no definition of the kind of housing to be financed under the agreement.
  • Specify for whom single (one to four units) or multi-family housing (five units or more) is affordable . Specify affordable rental housing or affordable homeownerships. Specify to whom loans will be made. Consider limited equity, rent-restricted, or market-rate properties.
  • Use language that allows clear evaluation of accomplishments : for instance, "$100 million minimum annually for multi-family rental housing loans with 66 percent of loans to very low-income tenants and nonprofit housing developers."
  • Avoid calling for unspecified " charitable contributions ," as in "charitable contributions of $200,000 annually to nonprofit organizations." This language is too vague regarding community needs. [For example, a big wad of cash in a brown paper bag passed under the table from the bank's CRA Officer to the head Community Organizer is much less vague. But, if they insist on writing a check, take it. After all, it's not taxable. You're a nonprofit!]
  • Set minimum contribution amounts with mechanisms for increasing contributions: "Charitable contributions equal to 2% of net income or no less than $1 million annually, of which 40% is allocated to nonprofit organizations creating housing and fostering economic development." [Such as your nonprofit organization.] The specific targeting of those contributions to affordable housing and economic development will form an important resource for your equitable development goals.

Leverage Agreements During Mergers

Utilize the regulatory scrutiny financial institutions face at the time of mergers to forge key CRA agreements. [Does "forge key CRA agreements" reflect exactly the right choice of words here?] Documentation is a key part of the CRA process. This process usually begins by filing a letter protesting the merger: To see the type of information that would be included in a protest letter, click here

Securing Finance Products that Work

In 1998, many newspapers carried a banner headline: Bank of America pledges $350 billion for community reinvestment. When the bank pledged $12 billion in 1992 and when Wells Fargo Bank pledged $45 billion in 1996, similar headlines appeared. What difference do these pledges really make for local businesses, neighbors and community organizations?

The truth is that the commitments probably have had more and less impact than anticipated. Direct commitments result in short term impact, with increased loans and financial presence. Indirect commitments slowly change the way banks operate, with long-term implications for the community. Both are important. With community residents and their organizations holding banks responsible, there can be scores of community investments and improvements occurring. The types of equitable development financing support to target include:

Lending

  • Small business loans (less than $50,000) previously unavailable, or only available at substantially higher interest rates.
  • Mortgage loans with low down payments and reasonable interest rates available to moderate and low-income residents.
  • Monitoring and correction of discriminatory practices.
  • Financing of affordable rental housing built by nonprofit developers.
  • Mortgage financing for long-term affordability properties including LEHCs and CLT housing.

Investments

  • Corporate grant programs that support community-based organizations.
  • Bank investments in nonprofit community development loan pools.

Services

  • Bank vendor purchase programs that offer business opportunities for minority-owned businesses.
  • Retention of local bank branches.

Clarity

Having clear goals is critical to the success of a community coalition if its members expect the bank to consider its position for increased investment. CRA activism can position both the community and banks to win. There is a common interest between the community getting its financial needs met and the bank making a reasonable profit from its products.

Allies

A broad-based alliance of community-based organizations can become a powerful force. Balancing the size and diversity of a coalition is a key challenge for starting and managing a CRA campaign. Evaluate banking issues to assess which allies to recruit :

If a branch closes, reach out to seniors and merchants who need a local branch nearby.

If deposit accounts are too expensive, organize youth and low-income people who need low cost checking and savings accounts.

If lending is discriminatory, identify merchants who need small business loans; neighbors who need home purchase loans; seniors who need equity loans to fix up their houses; local and state regulators and politicians who can champion fairness in lending.

If significant capital is needed for revitalization efforts, work with labor unions who will secure construction and development contacts; congregations and nonprofit developers that have worked to develop a community plan.

Summary Targets for a CRA Commitment

Developing targets for the bank commitments is fundamental to successful CRA advocacy. Organizations should strive for the deepest commitments possible to secure resident stability and ensure development without displacement in low-income communities. Banks engaged in CRA negotiations should be pressed to adopt the targeted investment criteria:

Target

Goal

Culturally Appropriate Lending

Develop flexible underwriting that responds appropriately to cultural borrowing habits of low-income people and people of color.

Affordable Housing Lending

Single Family Housing: Target loans to purchasers with incomes at or below 80% of median income; perform secondary review of denials.

Multifamily Rental Housing: Favor developments where tenants have incomes at or below 50% of median income; priority to nonprofit housing developers; number of years that the housing will remain affordable to these tenants.

Subprime Mortgage Lending

Maintain a lending program that matches conventional loans in terms of fees charged, insurance required and other elements. Ensure cross-referrals to conventional mortgages.

Small Business Lending

Confirm at least 50% of loans at or below $50,000; perform secondary review of denials.

Consumer Lending

Match percentage of loans to low- and moderate-income borrowers to percentage of low- and moderate-income households in the bank's assessment area.

Consumer Services

Provide free or low-cost checking accounts with low opening and balance requirements.

Marketing

Utilize local minority-owned media companies; support counseling programs for loan programs.

Branch Distribution

Open more full-service branches in low-income communities and communities of color; establish a clear procedure requiring community involvement before any branch is closed.

Community Investments

Increase investments in local Community Development Financial Institutions; improve the position of equity investments for Community Development Corporations.

Capacity Grants

Institute substantial grant programs to support capacity of community organizations, including community and housing developers.

Vendor Program

Establish programs focused on purchasing from minority-, disabled-, and women-owned firms; clear accounting by type of owner

Rural Program

Support programs that include self-help housing and other forms of rural assistance.

Meetings

Agree to share specific data prior to semiannual bank meetings.

Diversity

Provide a specific plan for diversifying the bank's top executive levels.

... Maintaining Coalition

The other main challenge involves maintaining the coalition to achieve reinvestment goals. It is critical that the coalition agree on its goals, structure and process early in the Remembercampaign, and stick to the agreement. The leaders need to balance the needs of stakeholders in a manner that keeps everyone moving forward together.

Any coalition faces a difficult task in setting reinvestment goals. These goals must relate directly to community needs and stakeholder interests. The goals must be realistic and achievable.

Since CRA campaigns can last a number of months, conflicts arise between stakeholders' short-term needs and the longer timeline of the campaign. Even after the bank makes a commitment, tensions can continue depending on what compromises have been made. As much as possible, set ambitious goals so that all parties see benefit in the final agreement. [Make the pie big enough so every hustler gets a big fat slice.] Resist bank attempts to undercut alliances by making grant offers to key coalition members contingent on their abandoning the campaign.

... Review CRA Evaluation : All large banks and savings and loans' CRA activities are examined at least every two years by federal banking regulators. ...

Monitor Merger Applications : All financial institutions must file an application for approval of an acquisition or merger. Portions of the application are public and can contain useful information. These are announced on the regulators' web sites and, often, in newspapers.

Evaluate CRA Public Files : All regulated financial institutions must keep all complaints for two years in at least one office in every metropolitan area as well as in the bank's main office. They must also keep a record of their CRA goals and activities in the file.

Review Fair Housing and Fair Lending Practices : It is illegal to discriminate against an applicant based on race, age, gender, or disability. Fair housing councils monitor violations, and can provide information about a bank's fair lending practices.

Monitor Annual Corporate Reports ...

Examine Proxy Statements : At times of major corporate events, such as mergers, the corporation issues a proxy statement to its shareholders and the SEC that often has very useful information in it about legal suits against the bank, financial difficulties, or new lines of business.

Scrutinize Home Mortgage (HMDA) Data : All mortgage lenders must report home purchase, refinance, and rehabilitation loans on properties with one to four housing units and permanent loans for larger units. These reports include loan applications, denials, and approvals categorized by race, gender, income, and census tract. They also contain data on multifamily mortgage lending (five or more units). This is public information and can be obtained from a bank main office or any branch in a metropolitan area.

Evaluate Business Lending Data :...

Compile Community Knowledge : Members of community organizations, neighbors and others are likely to know a great deal about historical lending discrimination and the needs of the community.

Track Deposits and Market Share : ...

Monitor Newspaper Articles and Public Testimony : ...

Apply Public Pressure

Petition Public Officials

There are four federal financial regulatory agencies - the Federal Reserve Bank, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS). They each have jurisdiction over different financial institutions although some very large banks may be regulated by more than one agency. The regulators examine larger banks every two years for 1) safety and soundness and 2) CRA compliance, including fair lending issues. Smaller banks, those with less than $250 million in assets, are now examined every four to five years.) Banks with negative ratings ("needs to improve" or "substantial noncompliance") are examined more often. Nearly 99 percent of all financial institutions get rated "satisfactory" or "outstanding" for their CRA activities. Some decry this as "grade inflation."

These increasingly important examinations are publicly announced on the regulators' web sites. They create an opportunity to organize community members, forge alliances, mount a letter writing campaign, identify bank lending, investment and service problems, and call for investigation. Writers should specifically ask that their letter be placed in the bank's public CRA file to document a history of problems with the bank when regulators must review the public CRA file.

When a merger or other activity requires approval, the regulators can hold public hearings. If hearings are not scheduled, communities can press for them. Regulators can also extend the comment period on proposed mergers to give community representatives more time to respond effectively.

Bank regulators should be visiting community organizations and businesses to study banking practices. If not, community advocates may choose to contact them, requesting a meeting or series of meetings.

City council members, state legislators, members of Congress and other officials should also be participating to ensure that local community needs are met. If not, applying community pressure may be worthwhile.

Measuring Success

As banks expand beyond any one community or state, community advocates must find ways to measure appropriate levels of commitment. When a bank is located in only one state, use bank assets and net income as the base measurement. California Reinvestment Committee advocates for at least 4.5 % of assets with 2% of net income before taxes as the amount of community investment and grants. ...

More than $1 Trillion Invested through CRA

Lenders and community organizations have negotiated $1.09 trillion in CRA dollars from 1992 to 2000. In contrast, $8.8 billion was negotiated from 1977 through 1991.

Two major factors contribute to increased commitments since 1992. First of all, NCRC members and other community organizations are becoming increasingly sophisticated in terms of being able to articulate community needs as well as providing homeownership counseling and other types of services in partnerships with banks.

The second major factor spurring the growth of CRA agreements is the structural evolution in the banking industry. As banks become regional and national in scope, they understand that it is important to maintain their local community lending and investing capacity. Large banks and thrifts make multi-state agreements with networks of community groups that tailor the lending and investing to fit local needs.

Courtesy of the National Community Reinvestment Coalition (NCRC)

Provisions of CRA Commitments

This section is designed to assist lenders and community leaders in identifying the range of credit, capital, investment, and servicing needs that can be included in a CRA commitment. Below, are an overview and actual examples of CRA commitments that illustrate the range of programs and products that have been negotiated between community organizations-or local governments-and lenders. ...

Single-Family

Single-family housing loans, for purchase or for home improvement, are the most frequently targeted form of housing in CRA commitments:

  • In agreement with the Massachusetts Association of Community Development Corporations, Citizens Bank pledged to make $10 million in affordable home mortgage loans to new immigrants over a five-year time period starting in 1999. Fannie Mae will purchase the loans. CRA agreements should, where possible, include commitments by secondary market institutions to purchase loans so that the banks can obtain more capital for making additional CRA loans.
  • In the wake of its takeover of H.F. Ahmanson's Home Savings of America, Washington Mutual [Hey, where have we heard that name before?] signed a $120 billion CRA agreement with the California Reinvestment Committee (CRC), the Greenlining Institute, the Washington Reinvestment Alliance, and other community groups. More than $80 billion of the ten-year commitment will be for single family lending to minorities and borrowers in low- and moderate-income census tracts. Low- and moderate-income borrowers (under 80 percent of median family income) will receive $30 billion of the loans.
  • Led by the Woodstock Institute and CANDO, the Chicago CRA Coalition of over 100 organizations signed a pioneering CRA agreement with First Chicago NBD in the summer of 1998. First Chicago will make 35,879 affordable, single-family home loans by the end of 2004. In each year, the bank's share of the market in low- and moderate-income areas will equal or exceed its share of the market in middle- and upper-income areas. Subprime lending will not be included in the lending increases to low- and moderate-income areas. In 1999, the Chicago CRA Coalition negotiated similar agreements with Old Kent Bank and Charter One.

Multi-family

  • In its 1999 agreement with the Chicago CRA Coalition, Old Kent promised to maintain a LMI-to-MUI market share ratio of 1.5 for multifamily lending for three years. In other words, the bank's market share of multifamily loans in low- and moderate-income census tracts will be 1.5 times greater than its market share of loans in middle- and upper-income communities.
  • The California Reinvestment Committee (CRC) and the Greenlining Institute, as part of their 1995 $45 billion agreement with Wells Fargo Bank of San Francisco, committed the bank to apply 60 percent of the $7 billion allotted to low-income housing towards low-income rental housing construction.

Nonprofit and Minority Housing Developers

  • The Washington Reinvestment Alliance, in its 1992 agreement with Key Bank, committed the bank to provide $10 million in lines of credit for community-based nonprofits and housing authorities engaged in the construction and rehabilitation of housing for low-income or first-time home buyers. ...

Housing Cooperatives, Land Trusts, and Mobile/Manufactured Housing

Although rare, a few CRA agreements have also included provisions specifying loans for these types of housing. [In other words, trailer trash are a CRA afterthought. I wonder why?] ...


Target Populations

Several agreements include provisions to ensure that the needs of underserved populations are met.

  • In its 1999 agreement with New Jersey Citizen Action and the Affordable Housing Network of New Jersey (now the Housing and Community Development Network of New Jersey), the Bank of New York pledged to allocate $10 million under a pilot program that would offer lower rate refinance loans to borrowers holding subprime loans. Under the pilot, borrowers will not be required to have a minimum credit score, provided they can demonstrate 18 months of satisfactory mortgage payments.

Lower Interest Loans

Below market interest rates for housing loans are also included in CRA commitments. With the advent of subprime lending, community groups have also secured promises from lenders that curb excessive costs from subprime loans.

  • U.S. Bank has opened an "Alternative Loan Division" that will make subprime home equity loans to borrowers who do not qualify for prime loans. In the fall of 2000, U.S. Bank promised the California Reinvestment Committee that all home equity operations of the bank will adhere to pricing guidelines consistent with fair lending laws. In addition, the bank promises to implement fair lending guidelines for business relationships with New Century and other subprime lenders.

Distress

Distressed properties are properties that are under the threat of foreclosure due to missed loan payments. Some CRA agreements contain provisions committing the lender to exercise greater forbearance for distressed properties in low- and moderate-income and minority neighborhoods.

  • ACORN, Philadelphia, in a 1986 agreement with Fidelcor, committed the bank to exercise greater forbearance prior to foreclosure. Specifically, the bank agreed to allow a moratorium on payments of up to six months where the failure to make payments is caused by circumstances beyond the control of the borrower, and there is a reasonable prospect that the borrower's situation will improve. The bank also agreed to allow repayment agreements permitting up to two years for a borrower to catch up on delinquent payments.

Loan Counseling

Even with concessions on loan terms and flexible underwriting criteria, low-income and minority individuals sometimes require counseling and education in order to be creditworthy for housing loans. A number of lenders in CRA agreements have committed to support loan counseling programs.

  • In its 1998 agreement with Inner City Press/Community on the Move, Equity One committed to paying up to $250 for credit counseling for borrowers 31 days late on loan payments. Equity One is a subprime lender that specializes in offering loans to people with blemished credit histories. A commitment to paying for credit counseling is an indication that the lender will not seek to profit from delinquencies and foreclosures.

Specific Loan Targets

While housing loans have been the primary focus of CRA agreements, community groups are increasingly using CRA agreements as a tool to promote economic development. CRA agreements include provisions setting dollar targets for small businesses, minority and women-owned enterprises, micro businesses, and economic development projects.

Small Business

Small business, while one of the main employment generators in the country, has traditionally faced problems accessing credit. A number of CRA agreements contain provisions committing lenders to target small businesses in low- and moderate-income areas....

Minority- and Women-Owned Business

  • In 1999, The Detroit Alliance for Fair Banking persuaded Michigan National Bank to target African-American businesses for loans under $500,000 including micro-loans up to $35,000. The bank will conduct second reviews of denied loans. The bank will promise that it will utilize the exemption under Regulation B for special purpose programs to report the number of loans made to minority business owners as well as those denied and loans made after second reviews.

Consumer Products

While not the primary focus of the CRA, community organizations have used CRA agreements as a means to increase access to consumer loan products for low-income and minority individuals.


Addressing Farm Needs

Many small, family farmers and minority farmers have trouble accessing credit from lenders. However, only a few CRA agreements have focused on rural credit needs.[Hicks from the sticks are a CRA afterthought. I wonder why?]

Support for Community Development Credit Unions (CDCUs)

CDCUs are member-owned and controlled nonprofit financial institutions that bring both credit and financial service to people and communities with limited access to mainstream financial institutions. Community groups have committed banks to support CDCUs in a number of ways. ...


Grants to Community-Based Organizations

CRA agreements contain provisions committing lenders to provide grants to community-based organizations.

  • In its 1997 agreement with the California Reinvestment Committee and the Greenlining Institute, Home Savings of America pledged to make charitable contributions of at least 2% of after tax income. At least 80 percent of this will benefit underserved communities. Home Savings will make at a minimum $72 million of charitable contributions over the next 10 years. ...

Banking Services

A pervasive problem in low-income and minority neighborhoods is the lack of access to basic banking services, forcing communities to use private check cashing outlets that often charge high fees. CRA agreements have committed banks to offer basic banking services at low cost to their communities.

Offer Basic or Lifeline Checking

Lifeline checking offers accounts with low, or no, fees and minimum balances.[This seems fine to me because it's not a loan that the taxpayers via the FDIC are on the hook for. This helps poor people save money rather than borrow money. This is a straightforward subsidy of calcuable, finite cost to the bank. ] ...

Bilingual Initiatives

In communities where English is not the prominent language, banks have committed to hire staff that reflect the varied languages spoken in the community.

  • The Fair Lending Coalition, in its 1991 agreement with Norwest Bank, committed the bank to hire and train bilingual staff at all branches where language barriers might pose an impediment to customer service.

Diversify Board

Some lenders have committed to appoint women or minorities to the board.

  • Native Action and other Northern Cheyenne Reservation organizations, in their 1992 agreement with First Interstate, committed the bank to maintain at least one Northern Cheyenne Tribal member as a board member.

Credit Needs Assessment

To ensure that a lender is offering loan products and services that are most appropriate to the specific credit needs of a community, many CRA agreements contain commitments by lenders to conduct a needs assessment of the community....

  • The Shelby County Community Reinvestment Coalition, in a 1990 agreement with Union Planters National Bank, committed the bank to focus more of its advertising efforts towards making new and existing customers in targeted census tracts aware of the bank's products and services. Specifically, the bank agreed to advertise on/in radio stations targeting minorities, in minority newspapers, post information in low- and moderate-income neighborhoods, advertise in neighborhood association newsletters, and advertise the bank's real estate lending services in minority real estate publications. [I wonder how much financial overlap there is between community organizers and these for-profit media?]

Reports and Disclosure ...

Where to Access Data

HMDA Data: These are available at http://www.ffiec.gov/hmda/default.htm, on the Federal Financial Institutions Examination Council (FFIEC) site.

Small Business Lending Data: Available by state, county, and MSA (Metropolitan Statistical Area) at the Federal Financial Institutions Examination Council (FFIEC) site: http://www.ffiec.gov/webcraad/craaggr.htm.

Corporate Financial Reports: These are available from the bank itself or the US Securities and Exchange Commission (www.sec.gov). Phone number (202) 942-8088.

CRA Public Evaluations: Evaluations The Federal Reserve, FDIC, Office of the Comptroller, and Office of Thrift Supervision are available at http://www.ffiec.gov/cracf/crarating/main.cfm. Other relevant data is available at

http://www.ffiec.gov/cra/

Fair Housing Information: This is available from your local Fair Housing Council or the National Fair Housing Advocate at www.fairhousing.com.

Population Data: This is available from the US Census Bureau at www.census.gov and your county and state governments. Phone number (301) 457-4608.

Local Data: This is available from your city or county planning office.


My published articles are archived at iSteve.com -- Steve Sailer

Illegal immigrant illegally admitted to UCLA

UCLA gets the most freshman admission applications of any college in the country. And, the California state constitution, as amended by Proposition 209, makes it illegal for UCLA to use racial preferences in admissions. But the law doesn't stop the diversicrats. From the LA Times, a profile of a freshman student:

[Karina] De La Cruz faces fairy tale odds. She's an illegal immigrant, so she isn't eligible for most forms of state and federal financial aid. The University of California system, by policy, does not require applicants to disclose their citizenship status: Officials say their goal is to find the best students, not to enforce immigration law. UCLA officials say they aren't even sure how many undocumented students are on their campus.

The 18-year-old De La Cruz graduated barely in the top 20% of her San Pedro High class and is competing against students with much higher GPAs and test scores. She probably doesn't have enough money to finish her first year of classes.

She has almost no safety net: She doesn't know her father, and her mother, who lives across the street, didn't get up to wish her good luck. She met a few people during orientation but doesn't have anyone she would consider a friend.

UCLA officials acknowledge that some freshmen are admitted for reasons other than their grades and test scores, that some students come from dramatically different backgrounds than many of their peers but show academic promise. They say there are programs on campus to help these students But De La Cruz isn't aware of them. ...

Presumably, they liked her essay about how deprived she is. Remember, UCLA is the school that, because they aren't allowed to use race in admissions, switched over to "comprehensive admissions," including an essay. They announced that they would give extra points to students who had been shot (although getting shot in a hunting accident likely wouldn't get you any brownie points).

San Diego State University was her dream school; she applied to six others, mostly UC and Cal State campuses. She never thought she'd get into UCLA, especially after San Diego State rejected her in February.

The average UCLA freshman boasted a 4.22 GPA in 10th and 11th grades, according to the most recent data posted by the school, and De La Cruz had a 3.365 at San Pedro High when she applied. She got a 21 out of a possible 36 on the ACT college admissions exam, ranking her in the 48th percentile in California. She scored 380 out of a possible 800 on an SAT subject test, putting her in the third percentile nationwide.

But on March 8, De La Cruz opened an e-mail from UCLA, and a congratulatory banner popped up. She screamed and asked a friend to look.

But then the 5 hours of commuting each day begins, along with her realization that she can't compete with the Asians in her Life Sciences class.

What's particularly stupid about UCLA admitting her as a freshman is that UCLA takes in 3000 to 4000 transfer students each year, typically community college graduates with an associate's degree. The community college grads often replace kids with higher scores who flunked out of UCLA's difficult first two years, and wind up getting a valuable UCLA degree instead. But, in their hunt for diversity, UCLA is likely going to turn her into academic roadkill, and then replace her with a JuCo transfer!

My published articles are archived at iSteve.com -- Steve Sailer

Hey, lady, don't blame us, we just work here

The AP reports:

First lady Michelle Obama set out Monday on a listening tour through the federal bureaucracy, stopping first at the Department of Education to thank employees for their service and rally them for the tough work ahead.

"So many of you have been here struggling and pushing for decades and Barack and I want to say 'thank you' for what you've done and 'thank you' for what you will continue to do," she told 350 employees who filled a department auditorium to capacity. ...

In thanking the workers, she told them: "I am a product of your work."

Or, as she put it in her Princeton senior thesis, "Thank-you."

I reported on her actual unhappy educational experience for VDARE.com a year ago.

She was educated at the top public high school in Chicago, Whitney Young, which only accepted the highest scoring applicants on the entrance exam—within each race. Time reported in 1975:

"… the $30 million Whitney M. Young Jr. High School will open as a magnet in the fall with—among other things—an Olympic-sized swimming pool, a special center for the performing arts and a separate curriculum for medical studies. Whitney Young also has a strict admissions quota: 40% white, 40% black, 10% Latin, 5% other minorities and 5% at the discretion of the principal."

Michelle was overshadowed by her smart and athletic older brother Craig Robinson, who is now the head basketball coach at Brown University of the Ivy League [now coach of Oregon St.]. Newsweek's cover story recounts:

"For Michelle, Craig's easy success was intimidating. 'She was disappointed in herself,' her mother tells NEWSWEEK. 'She used to have a little bit of trouble with tests …'"

Her poor performance on tests remains a sore point with Michelle, who brings it up in odd contexts, such as when discussing her husband's standing in the polls last November:

"You know, [I've] always been told by somebody that I’m not ready, that I can’t do something, my scores weren’t high enough."

Newsweek describes her career at Whitney Young:

"… but she was not at the top of her class. She didn't get the attention of the school's college counselors, who helped the brightest students find spots at prestigious universities. … Some of her teachers told her she didn't have the grades or test scores to make it to the Ivies. But she applied to Princeton and was accepted."

It just got worse from there.

A reader notes:
Instead of lecturing (and patronizing) these people, why doesn't Mrs Obama demonstrate her commitment to the cause by sending her own daughters to a state school?

My published articles are archived at iSteve.com -- Steve Sailer

Microsoft's Ballmer: It's not a recession, it's a resetting

Microsoft CEO Steve Ballmer made a useful terminological distinction last month:

“We’re certainly in the midst of a once-in-a-lifetime set of economic conditions. The perspective I would bring is not one of recession. Rather, the economy is resetting to lower level of business and consumer spending based largely on the reduced leverage in economy,” said Chief Executive Steve Ballmer during a conference call. For consumers, that may mean less discretionary income to spend on a second or third home computer, he said.

Australian economist Steve Keen commented on his DebtWatch site:

Bravo. That is precisely what is happening. It is also why, though government action might slow down the decline, ultimately it can’t prevent a serious decline in economic activity. That can happen only gradually as we slowly replace debt-generated spending capacity with income-generated capacity. What the government can do is remove the logjam standing in the way of that process, which is the crippling mountain of debt accumulated by the Ponzi financing behaviour of the last 4 decades (and in particular the last one). But that will require much more drastic action than simply bailouts: given the scale of debt accumulated, either the debt has to be devalued by inflation, or written down via government decree.

We’re still a long way from any government official or politician realising that. But the fact that someone as influential as Ballmer has put his finger on the problem implies that maybe that day of realisation is approaching.

More recently, Keen posted the World's Longest Blog Entry, explaining why everything you, me, and Ben Bernanke think we know about the fundamental economics of money is backwards. I have no idea if Keen is right, but I have to admit that when my children would ask me, "Why is a dollar bill worth a dollar?" -- I'd always start out confidently, but would end up waving my hands around, with a sinking feeling that I really had no clue.

My published articles are archived at iSteve.com -- Steve Sailer

February 2, 2009

Ben Roethlisberger

Continuing my recent trend of blogging about sports I know very little about, I was going to mention that a cool thing about 2-time Super Bowl winning quarterback Ben Roethlisberger (besides his being Swiss-American) is that his sports upbringing seemed more old fashioned Jack Armstrong-like go-outside-and-play than that of so many of the new robo-quarterbacks who are raised by their fathers from the cradle to be NFL quarterbacks. The Sideline Dad has become as ubiquitous as the Stage Mom.

For example, Notre Dame's quarterback Jimmy Clausen was held back two years by his parents so that as a high school senior at expensive Oaks Christian in Ventura County, he was a 19-year-old man playing against 17-year-old boys, making him the top-rated high school QB in the country. He also had two older brothers who had started at QB in the SEC, and had a former NFL QB as his private quarterback tutor since he was 10.

Quarterback is turning into something of a caste. Now the quarterback at Clausen's old high school, Oaks Christian, is Nick Montana, whose dad is some guy named Joe. But don't worry, there's still hope for boys whose dads aren't NFL Hall-of-Fame QBs. It's said that the Oaks Christian second string QB next season will likely be Trevor Gretzky, the son of an immigrant.

Anyway,
Roethlisberger was this enormous kid (he's now 6'-5" and 241 pounds) with fantastic coordination who played three sports in high school. Basketball was his strongest emphasis in high school, then baseball (where he played shortstop), and then, finally, football. This reminded me of this old series of boy's books I read as a kid, a series kind of like Tom Swift or the Hardy Boys, about a schoolboy athlete named Chip Hilton, with each of the 24 books covering one of his seasons from football as a freshman in high school to baseball as a senior in college. No off-season strength training for him -- just pick up a different ball and play.

In fact,
Roethlisberger didn't play quarterback until his senior year in high school. He'd been a wide receiver as a junior. Once he finally took over as quarterback, he threw 54 touchdown passes in his senior season and accepted a scholarship to a local college, Miami of Ohio, which wasn't known as football powerhouse until he arrived. After three outstanding seasons, he was drafted #11 (behind Eli Manning and Philip Rivers, both of whom have done well in the NFL)

It's a great story, but when I looked into it, it turns out that
Ben Roethlisberger's dad, Ken, won a scholarship to Georgia Tech as a quarterback (although he injured his knee and didn't play in college). And Ben's still kind of sore that his high school coach didn't let him play QB as a junior. Instead, the coach had his own son stay at QB. The coach's son threw 14 touchdown passes, compared to the 54 Ben threw next season. But when the coach's son played Division III college football, he washed out as a quarterback but then succeeded as a wide receiver.

Sideline Dads ...

My published articles are archived at iSteve.com -- Steve Sailer

More on the Community Reinvestment Act as a selective filter

A reader responds to my new VDARE.com article on the subtle but pervasive way in which the Community Reinvestment Act changed the culture of mortgage lending in America.

... my husband was working at [Famous Old] Bank at that time and was dealing with the pressures of CRA mandates during merger talks with other banks. He saw the kinds of promises [Famous Old Bank] had to make to get approval and he actually had to work with bullies at ACORN to get the job done. As I am much more to the right and more aware than he was, I pointed out that this would eventually skew the banking system in a very corrupt and unprofitable ways just to go along with the new government rules. As a banker, he just saw what he had to do to accomplish the ends.

This is like a car that can only go straight or turn left, not right. You'd initially think that if you could drive it straight down a highway no problem, but each little random shock aims it farther to the left with no way to go back to the right. And so it eventually ends up in the ditch on the left. (Interestingly, to get the banks out of the ditich, the federal government ignored the CRA process last fall in approving emergency buy-ups of broke banks.)
Ultimately, the failure of the banking system can be narrowed down to one set of core beliefs that nearly everyone in our society ascribes to: all groups are equal. There is no reason for them to believe, despite the mounds and mounds of evidence, that this premise is fatally flawed. So the Carter, Bush, Clinton, and Bush administrations operating under this false premise with near religious certainty saw no problem in pushing the banks in the direction of lending to peoples and groups who could or would not conform to the standard values of this society. This religious belief in the equality of groups is still enshrined in our value system. I don't know what it will take to change this -- but rest assured it will result in greater calamities ...

You can see how the CRA, along so much else, filters the culture. By wielding a veto over bank acquisitions, it announces, "You can lend money, invest, and give away money as you see fit, as long as you want to be the hunted, not the hunter in the mergers & acquisition game." Combine that with the constant patter of discrimination lawsuits where any mention coming up in discovery of bank executives mentioning the different default rates of the races would likely lead to an instant settlement, and, combined with the education and media systems, you can see how we bred an entire generation of Kool-Aid drinkers.
Meanwhile, the capitalist were "doing well by doing good", the government could further their social engineering objectives, and the masses of Americans were kept in ignorance by a vile and corrupt media, even though they are left holding the bill and will pay the price for a fallen America.

Thanks for writing about these important subjects. It seems as if very few people have the knowledge and ability to do so (or the courage).

My published articles are archived at iSteve.com -- Steve Sailer

More UFC

I don't know if you can read it without a subscription to The Atlantic, but here is David Samuels's recent Atlantic article on the UFC championship fight between Rampage Jackson and Forrest Griffin. (By the way, Samuels wrote in The New Republic one of the best articles on Obama's autobiography (i.e., he clearly had read my stuff when researching his essay).

For an analysis of Rampage Jackson's cognitive decision-making skills in the wake of his loss to Griffin, when he was arrested after trying to sneak away in his vehicle from a traffic accident he caused, see What Would Tyler Durden Do?:
Rampage is maybe the most charismatic and likeable athlete to come around since Barkley, but he’s no criminal mastermind. He committed a hit and run in a [jacked-up monster] truck with his name and picture on the side. “Can you describe the vehicle that hit you, sir?” “Yes, imagine if Rampage Jackson was a truck.”

My published articles are archived at iSteve.com -- Steve Sailer

UFC

Being the kind of guy who is totally up to date on all major social trends, I finally watched on TV some bouts of the Ultimate Fighting Championship, the big growth spectator sport of the 2000s. As you no doubt know better than I do, this is a "mixed martial arts" competition. Originally, it was put together by, among others, John Milius (screenwriter of "Apocalypse Now," director of "Red Dawn," and the model for John Goodman's Walter Sobachek in "The Big Lebowski") to answer classic male questions such as: "Who would win in a fight: a boxer or a wrestler? A tai chi blackbelt or a krav maga adept?"

It has since evolved so that most fighters have a blend of skills, although you can still kind of tell which discipline they started out in. The two fighters typically start out boxing, with maybe a little kicking, then end up rolling around on the ground like high school wrestlers.

To me, it's like watching wrestling in the Olympics: two guys suddenly collapse in a heap and squirm about, with the announcers going so wild with excitement that they leave out all the antecedents for their pronouns, as if Henry James had written pulp novels: "Did you see what he did to him?" "Yeah, he's really taken control." Look at the advantage he has over him!" And I keep wondering "Who? Whom? What just happened?"

One thing you've got to say for professional wrestling: it's quite clear at any single point in time who is doing what to whom. When Kurt Angle sneaks up behind The Rock and hits him over the head with a folding chair, well, that I can follow. But any kind of real grappling between well-matched experts involves such a rapid flurry of moves and countermoves aimed at establishing a small advantage in leverage that I'm mostly at sea as a viewer.

The main event of the night involved a big French Canadian guy who sat on a little Hawaiian guy and punched the little guy's defenseless head against the mat until the poor bastard finally gave up.

Allow me to make a prediction. We hear a lot about UFC being the Sport of the Future, but I suggest that the real Sport of the Future, whatever it turns out to be, will not involve hitting people in the head. Hitting them elsewhere, definitely. But not the head.

In the Ali-Frazier-Foreman era in the 1970s, boxing was a gigantic sport. It was hard to imagine it would sink so low in just 35 years. But it has, and a big reason is that as we got more familiar with what happens to boxers as they get old, it has become harder to take pleasure in the sport.

Having just watched a great 4th quarter of the Super Bowl (except for all the damn penalties), it's hard to imagine that American football will fade in popularity. But I sense that it will over the next half century because of head injuries.

So, that's my sense of the future: the favorite spectator sports will remain some form of ritualized combat, but with less brain trauma.

The UFC might turn out to be that sport since it could presumably finetune its rules (e.g., no hitting people in the head repeatedly while holding their arms down so they can't try to block your punches.) But knockouts are dramatic, and they don't require judges to decide matches. Olympic boxing, for instance, has never recovered from the ludicrous split decision Seoul in 1988 in favor of the hometown Korean over the great Roy Jones Jr.

My published articles are archived at iSteve.com -- Steve Sailer

February 1, 2009

The Community Reinvestment Act and the Rise and Fall of Washington Mutual

From my new VDARE.com column:

The mortgage fiasco devastating America’s big banks has many causes, but perhaps the least understood is the complex impact of the 1977 Community Reinvestment Act (CRA). There has been some hoopla over the CRA in recent months, but nobody seems to have noticed the subtle way the CRA actually exacerbated the disaster.

I’ll demonstrate using the meteoric rise and fall of Washington Mutual, Inc. (WaMu). Under CEO Kerry Killinger’s direction, WaMu went from being an obscure Seattle outfit to the sixth biggest bank in America. ...

I recently came upon this old Washington Mutual press release on Eric Falkenstein's Falkenblog dating back to WaMu’s $5.2 billion purchase of New York City’s Dime Bank:

“SEATTLE, Dec 21, 2001 … In connection with its merger with Dime [Bank], Washington Mutual recently established a ten-year, $375 billion community commitment which targets funding to low- and moderate-income borrowers, and minority borrowers … One of the largest community commitments of its kind, the ten-year pledge will be implemented with the assistance and support of a variety of non-profit community partners.”

On WaMu’s still-existent website, the bank explains that $375 billion pledge:

“These funds will provide loans and other financial support to communities consisting predominantly of people of color, to residents of low- to moderate-income (LMI) census tracts, and to people whose income is below 80 percent of median income. We will strive to create products and programs that increase our market share in low income and diverse communities, with a long-term goal of making our market share in these communities more closely mirror our market share overall. Using our Year 2000 production as a baseline, we have set our goal to double the number of loans made to borrowers of color by the end of the first year of this commitment. Thereafter, we will increase the number of loans made in these communities as quickly as possible.”

Not surprisingly, WaMu won the 2003 CRA Community Impact Award.

We now know that subprime foreclosures are centered among exactly the kind of people targeted in WaMu’s CRA agreement with racial activists. During the Housing Bubble of 2004-2007, minorities accounted for twice as many subprime dollars borrowed per capita than did whites. And the new report by the Boston Fed shows that, at least in Massachusetts, minorities defaulted on subprime loans at twice the white rate. All this suggests that minorities accounted for approaching two-thirds of subprime mortgage dollars lost.

For the GOP, the Community Reinvestment Act (CRA) was a more convenient example of government interference in the mortgage markets than, say, George W. Bush's 2002-2004 holy war on down payments in his effort to boost minority home ownership. That’s because the CRA was passed by a Democratic Congress and signed by a Democratic President.

Of course, the GOP’s claims about the CRA's centrality in the mortgage meltdown were obviously partisan. And more skepticism about the importance of the CRA seemed plausible, along these lines:

"How could the government hold a gun to the financial institutions' heads and force them to make hundreds of billions in stupid loans? Sure, giving out $375 million in stupid loans to get the government off your back, that would make sense. $3.75 billion, maybe. $37.5 billion, conceivably. But $375 billion, no way. Nobody would promise to give away $375 billion to dubious borrowers unless they thought it was a great idea. They’d leave the industry before they’d promise to hand out $375 billion to people whom they doubted would pay it back.”

In general, the government and its associated racket-runners can extort mid-level amounts of affirmative action booty. But when the demands get too great, businesses exit in one way or another. (Often with bad effects on general welfare, of course).

Obviously, it's a massive exaggeration to say the government and the ACORN clones forced WaMu to lend to likely deadbeats. Nobody promises to loan out $375 billion to low and moderate income and minority borrowers unless they actually want to lend out to low and moderate income and minority borrowers something approaching $375 billion.

Moreover, Washington Mutual sure didn’t act reluctant. They were positively exuberant about pouring money into the hands of minorities with weak histories of paying off debts. The relatively small number of big financial institutions that did a major fraction of subprime lending really seem to have drunk the same Kool-Aid as ACORN, Congress, Clinton, and Bush. They actually thought they were going to get rich off no-money-down, $400,000 loans to high school dropouts.

And they did, for a few years. CEO Killinger “earned” $88 million from 2001-2007.

WaMu's strategy was lending to deadbeats—the more minority the better. For years, WaMu ran a series of TV commercials where one cool black guy in a blue WaMu shirt, an actor who looked like a cross between Barack Obama and Don Cheadle, would humiliate dozens of old white bankers in suits.

Most advertisers would have put one token minority banker in the crowd of pompous empty suits. But WaMu didn't bother. They wanted to get their message across.

So it would seem that WaMu didn't need the CRA to blows billions.

And yet ... there's a more subtle point that I, and seemingly everybody else, missed in dismissing the CRA: the impact of the CRA's veto over bank acquisitions: the selection effect on who gets to get big.

For a full explanation of one nearly universally overlooked point about the the causes of the mortgage meltdown, continue reading here.

My published articles are archived at iSteve.com -- Steve Sailer