[EMAIL PROTECTED] wrote:
there's a somewhat deeper issue here; while blaming the CRA is clearly asinine
talking points, in my opinion, the whole project of looking for micro
explanations of what was clearly a macro phenomenon is screwed.
Hey Daniel, surely you do both, macro and micro? The micro process
behind overindebtedness is fascinating. It often boils down to an
extreme version of combined/uneven development during periods of
broad-based overaccumulation crisis, but even at it's best, in opportune
macro conditions (low interest environment, high growth), the scamming
of poor people through microfinance is a serious problem (
http://www.nu.ac.za/ccs/files/Bond%20IJHS%20microcredit%20critique.pdf ).
Jim Devine wrote:
Slate Magazine / moneybox
Subprime Suspects
The right blames the credit crisis on poor minority homeowners. This
is not merely offensive, but entirely wrong.
By Daniel Gross ... [McCain sez]: "it was only a matter of time before a
contagion of unsustainable debt began to spread."
Let's not laugh at this. A Marxist or Minskyian Post-Keynesian approach
is consistent with this statement. At the Philadelphia Fed, 25 years ago
last week, I was the first person every hired as a full-time regulator
enforcing the CRA, and 20 years ago last month, was the author of the
first-ever successful CRA Protest (as judged by the Fed board) against a
bank, Continental Illinois (a lemon-socialist bank in Chicago that tried
opening a Phoenix branch). The CRA was always a rather dubious
'reformist reform' (to borrow from Gorz), and the activists who got it
past Congress in 1977, like Gale Cincotta, always said, to hell with the
merits of banks doing more business in low-income neighborhoods - this
was best understood as a vehicle for exercising community power against
capital. We used it frequently to intimidate banks out of SA from
1985-87 and to address the Third World debt crisis, and it was quite a
weapon.
... subprime has been a symptom, not a
cause. And the notion that the Community Reinvestment Act is somehow
responsible for poor lending decisions is absurd.
Sure, but...
Here's why. The Community Reinvestment Act applies to depository banks. But
many of the institutions that spurred the massive growth of the subprime market
weren't regulated banks.
Well, a commercial bank could claim an increasingly high rate of
inner-city mortgage originations in CRA exams and then securitize them.
So the WSJ argument isn't entirely wrong.
But by nitpicking like this, it's tempting to avoid the deeper Marxian
and Minskyian insights that better explain the series of fictitious
capital bubbles. As Jim Devine knows as well as anyone.
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