Michael Gaynor
Former Freddie Mac consultant Gingrich in 2012? NO!
By Michael Gaynor
There is no perfect candidate, but surely we can do better than a man who took consultant fees from Freddie Mac and did not blow the whistle about its policies that he's taken to calling "insane."
Twice-divorced, thrice married Newt Gingrich hopes that his unenviable marital history won't matter to the voters.
He also hopes that his shameless relationship with Freddie Mac won't matter to voters either.
Both of them should matter, and will matter to significant numbers of voters.
Michelle Malkin is right not to whitewash Gingrich (http://michellemalkin.com/2011/10/17/gop-2012-the-hold-your-nose-tracker/):
"...let's not pretend away Newt's own very recent strayings from mainstream conservatism. He snuggled up to Nancy Pelosi and Al Gore in 2008 (and laughably tried to spin the humiliating lovefest as a 'debate').
"He went on tour with Obama Education Secretary Arne Duncan and race hustler Al Sharpton in September 2009 and again in November 2009:
"He endorsed ACORN-friendly, Big Labor-backing, tax-and-spend abortion radical Dede Scozzafava in the NY-23 debacle in October 2009, prompting rank-and-file conservatives to send back his book and GOP solicitations like this one from reader Barnaby, who sent back his crossed-out Republican solicitation forms with a 'NO RINOS' sticky note for Newt Gingrich....
"He's played footsie with Hillary Clinton on health care, backed an individual health care mandate and aspects of Romneycare, and vigorously attacked Paul Ryan's free-market-based Medicare reform plan."
There is no perfect candidate, but surely we can do better than a man who took consultant fees from Freddie Mac and did not blow the whistle about its policies that he's taken to calling "insane."
If he had blown the whistle, perhaps the financial crisis (and the resultant election of ACORN guy Obama) would have been averted.
Hot Air's Ed Morrissey began with a general question after reading thia Bloomberg report (www.bloomberg.com/news/print/2011-11-16/gingrich-said-to-be-paid-at-least-1-6-million-by-freddie-mac.html): "Is a big consulting payday, or several of them, a big deal in a Republican presidential race?"
Morrissey's answer: "It depends on the client, and it depends on the work."
That's true.
People with choices are responsible for the choices they make, so let's examine the choices of presidential aspirants.
Here are specifics: The presidential hopeful is Newt Gingrich, his client was Freddie Mac and the work was "consulting."
Also, the years involved are 1999-2002 and 2006-2008 and he didn't render his services pro bono.
Bloomberg reported:
"Newt Gingrich made between $1.6 million and $1.8 million in consulting fees from two contracts with mortgage company Freddie Mac, according to two people familiar with the arrangement.
"The total amount is significantly larger than the $300,000 payment from Freddie Mac that Gingrich was asked about during a Republican presidential debate on Nov. 9 sponsored by CNBC, and more than was disclosed in the middle of congressional investigations into the housing industry collapse.
"Gingrich's business relationship with Freddie Mac spanned a period of eight years. When asked at the debate what he did to earn a $300,000 payment in 2006, the former speaker said he 'offered them advice on precisely what they didn't do,' and warned the company that its lending practices were 'insane.' Former Freddie Mac executives who worked with Gingrich dispute that account."
It's no surprise that some facts are disputed.
What is not disputable is that as the end of the Clinton Administration neared, Freddie Mac hired Gingrich and then hired him again as the Bush 43 years neared their end and the finacial crisis that ironically would make Obama President loomed.
If Gingrich had passed on the consulting monies and instead called a press conference to warn that the sky would fall because the Congressional Democrats had blocked the Bush Administration effort to put Fannie Mae and Freddie Mac under United States Treasury Department supervision, I missed it.
He took the money and consulted under a confidentiality agreement instead.
After his consulting contract expired, he was critical.
Morrissey wrote:
"Gingrich has stated that he tried to advise Freddie Mac executives to reform their lending practices and advised them on historical problems with loose lending. According to Bloomberg's sources, in the first few years he provided written support for their initiatives, which they used to argue for support from Congress in the early years of the bubble.
"What about later? Bloomberg's report contains this curious passage about his 2006 contract, which lasted until 2008, just as the bubble popped:
"'Former Freddie Mac officials familiar with his work in 2006 say Gingrich was asked to build bridges to Capitol Hill Republicans and develop an argument on behalf of the company's public-private structure that would resonate with conservatives seeking to dismantle it.
"'He was expected to provide written material that could be circulated among free-market conservatives in Congress and in outside organizations, said two former company executives familiar with Gingrich's role at the firm. He didn't produce a white paper or any other document the firm could use on its behalf, they said.'"
It's not surprising is that there was a confidentiality agreement.
Bloomberg: "What was Gingrich telling them from 2006-8? Gingrich says he's bound by a confidentiality agreement — standard for consultants with access to highly proprietary information — and I'm betting Freddie Mac won't be releasing him from those NDAs any time soon."
Does Gingrich really want to be released?
Should Freddie Mac keep getting bailed out if it doesn't release him?
Don't the voters have a need to know?
Bloomberg:
"Since his retainer with Freddie Mac ended in 2008, Gingrich has become a critic of the government-sponsored enterprises, which were pushed into insolvency by subprime mortgages.
"The two companies, Freddie Mac and Fannie Mae, 'are so thoroughly politicized and preside over such irresponsible lending policies that they need to be replaced with smaller, private companies operating without government guarantees, whose leaders focus on making a profit, not manipulating politicians,' Gingrich wrote in his 2011 book, 'To Save America.'
"In an Oct. 11 Republican presidential debate, Gingrich said, Democrats and housing-loan loan practices led to the house industry's collapse.
"'You ought to start with Barney Frank,' when talking about people to put in jail, Gingrich said, referring to the Massachusetts congressman who serves as the ranking Democrat on the House Financial Services Committee. 'Go back and look at the lobbyists he was close to at Freddie Mac,' Gingrich said in the debate, sponsored by Bloomberg News and the Washington Post."
Morrissey's speculation: "It's possible that Gingrich supported Congressional pressure on Fannie and Freddie to expand home ownership in 1999-2002 during his first round with Freddie, and then changed his mind during his second consultation period. That would mean that both Gingrich and Bloomberg's sources are telling the truth, but just in the context of different time frames. That would certainly explain why Gingrich didn't provide them any supporting white papers despite being on a two-year retainer from 2006-8."
Freddie got at least exactly what it wanted and for what it paid: Gingrich's silence.
Morrissey: "Even so, the fact that Gingrich had such a lengthy consulting relationship with such a toxic organization might be enough to turn off Republican voters. The nexus of power and big business is one of the themes of the Tea Party's efforts at reform, and the ability of the powerful to move into consulting relationships with big-money players like Freddie Mac is one of the symptoms of the problem. If anyone could defend their connections to Freddie, it's Gingrich, and we'll see if any defense is possible."
Let's see the Freddie Mac's Gingrich files!
To understand what was going on, one needs to know the history of the Community Reinvestment Act (CRA).
As I set forth on September 29, 2008 in "Blame Obama's ACORN for the Financial Crisis" quoting Wikipedia on the Community Reinvestment Act:
"Clinton Administration Changes of 1995
"In 1995, as a result of interest from President Bill Clinton's administration, the implementing regulations for the CRA were strengthened by focusing the financial regulators' attention on institutions' performance in helping to meet community credit needs.
"These revisions with an effective starting date of January 31, 1995 were credited with substantially increasing the number and aggregate amount of loans to small businesses and to low- and moderate-income borrowers for home loans. These changes were very controversial and as a result, the regulators agreed to revisit the rule after it had been fully implemented for seven years. Thus in 2002, the regulators opened up the regulation for review and potential revision. Part of the increase in home loans was due to increased efficiency and the genesis of lenders, like Countrywide, that do not mitigate loan risk with savings deposits as do traditional banks using the new subprime authorization. This is known as the secondary market for mortgage loans. The revisions allowed the securitization of CRA loans containing subprime mortgages. The first public securitization of CRA loans started in 1997 by Bear Stearns. The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent.
"Other rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks. By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market.
"George W. Bush Administration Proposed Changes of 2003
"In 2003, the Bush Administration recommended what the NY Times called 'the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.' This change was to move governmental supervision of two of the primary agents guaranteeing subprime loans, Fannie Mae and Freddie Mac under a new agency created within the Department of the Treasury. However, it did not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enabled them to issue debt at significantly lower rates than their competitors. The changes were generally opposed along Party lines and eventually failed to happen. Representative Barney Frank (D-MA">www.webcommentary.com/php/ShowArticle.php?id=gaynorm&date=080929 quoting Wikipedia on the Community Reinvestment Act:
"Clinton Administration Changes of 1995
"In 1995, as a result of interest from President Bill Clinton's administration, the implementing regulations for the CRA were strengthened by focusing the financial regulators' attention on institutions' performance in helping to meet community credit needs.
"These revisions with an effective starting date of January 31, 1995 were credited with substantially increasing the number and aggregate amount of loans to small businesses and to low- and moderate-income borrowers for home loans. These changes were very controversial and as a result, the regulators agreed to revisit the rule after it had been fully implemented for seven years. Thus in 2002, the regulators opened up the regulation for review and potential revision. Part of the increase in home loans was due to increased efficiency and the genesis of lenders, like Countrywide, that do not mitigate loan risk with savings deposits as do traditional banks using the new subprime authorization. This is known as the secondary market for mortgage loans. The revisions allowed the securitization of CRA loans containing subprime mortgages. The first public securitization of CRA loans started in 1997 by Bear Stearns. The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent.
"Other rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks. By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market.
"George W. Bush Administration Proposed Changes of 2003
"In 2003, the Bush Administration recommended what the NY Times called 'the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.' This change was to move governmental supervision of two of the primary agents guaranteeing subprime loans, Fannie Mae and Freddie Mac under a new agency created within the Department of the Treasury. However, it did not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enabled them to issue debt at significantly lower rates than their competitors. The changes were generally opposed along Party lines and eventually failed to happen. Representative Barney Frank (D-MA) claimed of the thrifts 'These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.' Representative Mel Watt (D-NC) added 'I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing.'
"Changes of September 2005
"Among banks and the regulatory agencies, there was a consensus that data collection, recordkeeping, and reporting requirements imposed a heavy burden on small community institutions. As a result of a 2002 review of the CRA regulations, and revision of an initial Federal Deposit Insurance Corporation (FDIC) proposal following a public commenting period that was largely negative, the FDIC, Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board (FRB), made substantive changes to the implementation of regulations for the CRA for banks (not thrifts).
"Previously, all institutions over $250 million in assets were subject to a three-part CRA test that covered lending (including community development loans), qualified investments, and services (including community development services) to their assessment areas. Institutions less than $250 million were subject only to a lending test.
"However, as of September 1, 2005, only those institutions with more than $1 billion in assets were subject to the three-part test. Institutions below $250 million remain subject to only a lending test, and a new CRA test was created for institutions with assets between $250 million and $1 billion. This latter category, referred to as Intermediate Small Banks, is subject to the same lending test to which institutions under $250 million were subject, along with a new combined community development test that covers community development loans, qualified investments, and community development services. The $250 million and $1 billion asset thresholds also were indexed to the consumer price index and could change annually. Thus, all institutions remain subject to the CRA test. These substantive changes were intended to be a compromise between changes advocated by banks and community groups.
"However, the changes were not received positively by all community groups. Changes to tests conducted on the Intermediate Small category were viewed by some as decreasing the institutions' obligations to meet lending requirements of low- and moderate-income households. Racial inequities in mortgage acceptance rates (as reported by Inner City Press, the National Community Reinvestment Coalition, ACORN and other groups) are cited as a primary reason to maintain or even increase the scope of the CRA."
Instead of blowing the whistle on Fannie and Freddie, Gingrich chose to be a very well paid consultant.
NOT the choice a person fit to be President of the United States would make.
© Michael Gaynor
November 17, 2011
There is no perfect candidate, but surely we can do better than a man who took consultant fees from Freddie Mac and did not blow the whistle about its policies that he's taken to calling "insane."
Twice-divorced, thrice married Newt Gingrich hopes that his unenviable marital history won't matter to the voters.
He also hopes that his shameless relationship with Freddie Mac won't matter to voters either.
Both of them should matter, and will matter to significant numbers of voters.
Michelle Malkin is right not to whitewash Gingrich (http://michellemalkin.com/2011/10/17/gop-2012-the-hold-your-nose-tracker/):
"...let's not pretend away Newt's own very recent strayings from mainstream conservatism. He snuggled up to Nancy Pelosi and Al Gore in 2008 (and laughably tried to spin the humiliating lovefest as a 'debate').
"He went on tour with Obama Education Secretary Arne Duncan and race hustler Al Sharpton in September 2009 and again in November 2009:
"He endorsed ACORN-friendly, Big Labor-backing, tax-and-spend abortion radical Dede Scozzafava in the NY-23 debacle in October 2009, prompting rank-and-file conservatives to send back his book and GOP solicitations like this one from reader Barnaby, who sent back his crossed-out Republican solicitation forms with a 'NO RINOS' sticky note for Newt Gingrich....
"He's played footsie with Hillary Clinton on health care, backed an individual health care mandate and aspects of Romneycare, and vigorously attacked Paul Ryan's free-market-based Medicare reform plan."
There is no perfect candidate, but surely we can do better than a man who took consultant fees from Freddie Mac and did not blow the whistle about its policies that he's taken to calling "insane."
If he had blown the whistle, perhaps the financial crisis (and the resultant election of ACORN guy Obama) would have been averted.
Hot Air's Ed Morrissey began with a general question after reading thia Bloomberg report (www.bloomberg.com/news/print/2011-11-16/gingrich-said-to-be-paid-at-least-1-6-million-by-freddie-mac.html): "Is a big consulting payday, or several of them, a big deal in a Republican presidential race?"
Morrissey's answer: "It depends on the client, and it depends on the work."
That's true.
People with choices are responsible for the choices they make, so let's examine the choices of presidential aspirants.
Here are specifics: The presidential hopeful is Newt Gingrich, his client was Freddie Mac and the work was "consulting."
Also, the years involved are 1999-2002 and 2006-2008 and he didn't render his services pro bono.
Bloomberg reported:
"Newt Gingrich made between $1.6 million and $1.8 million in consulting fees from two contracts with mortgage company Freddie Mac, according to two people familiar with the arrangement.
"The total amount is significantly larger than the $300,000 payment from Freddie Mac that Gingrich was asked about during a Republican presidential debate on Nov. 9 sponsored by CNBC, and more than was disclosed in the middle of congressional investigations into the housing industry collapse.
"Gingrich's business relationship with Freddie Mac spanned a period of eight years. When asked at the debate what he did to earn a $300,000 payment in 2006, the former speaker said he 'offered them advice on precisely what they didn't do,' and warned the company that its lending practices were 'insane.' Former Freddie Mac executives who worked with Gingrich dispute that account."
It's no surprise that some facts are disputed.
What is not disputable is that as the end of the Clinton Administration neared, Freddie Mac hired Gingrich and then hired him again as the Bush 43 years neared their end and the finacial crisis that ironically would make Obama President loomed.
If Gingrich had passed on the consulting monies and instead called a press conference to warn that the sky would fall because the Congressional Democrats had blocked the Bush Administration effort to put Fannie Mae and Freddie Mac under United States Treasury Department supervision, I missed it.
He took the money and consulted under a confidentiality agreement instead.
After his consulting contract expired, he was critical.
Morrissey wrote:
"Gingrich has stated that he tried to advise Freddie Mac executives to reform their lending practices and advised them on historical problems with loose lending. According to Bloomberg's sources, in the first few years he provided written support for their initiatives, which they used to argue for support from Congress in the early years of the bubble.
"What about later? Bloomberg's report contains this curious passage about his 2006 contract, which lasted until 2008, just as the bubble popped:
"'Former Freddie Mac officials familiar with his work in 2006 say Gingrich was asked to build bridges to Capitol Hill Republicans and develop an argument on behalf of the company's public-private structure that would resonate with conservatives seeking to dismantle it.
"'He was expected to provide written material that could be circulated among free-market conservatives in Congress and in outside organizations, said two former company executives familiar with Gingrich's role at the firm. He didn't produce a white paper or any other document the firm could use on its behalf, they said.'"
It's not surprising is that there was a confidentiality agreement.
Bloomberg: "What was Gingrich telling them from 2006-8? Gingrich says he's bound by a confidentiality agreement — standard for consultants with access to highly proprietary information — and I'm betting Freddie Mac won't be releasing him from those NDAs any time soon."
Does Gingrich really want to be released?
Should Freddie Mac keep getting bailed out if it doesn't release him?
Don't the voters have a need to know?
Bloomberg:
"Since his retainer with Freddie Mac ended in 2008, Gingrich has become a critic of the government-sponsored enterprises, which were pushed into insolvency by subprime mortgages.
"The two companies, Freddie Mac and Fannie Mae, 'are so thoroughly politicized and preside over such irresponsible lending policies that they need to be replaced with smaller, private companies operating without government guarantees, whose leaders focus on making a profit, not manipulating politicians,' Gingrich wrote in his 2011 book, 'To Save America.'
"In an Oct. 11 Republican presidential debate, Gingrich said, Democrats and housing-loan loan practices led to the house industry's collapse.
"'You ought to start with Barney Frank,' when talking about people to put in jail, Gingrich said, referring to the Massachusetts congressman who serves as the ranking Democrat on the House Financial Services Committee. 'Go back and look at the lobbyists he was close to at Freddie Mac,' Gingrich said in the debate, sponsored by Bloomberg News and the Washington Post."
Morrissey's speculation: "It's possible that Gingrich supported Congressional pressure on Fannie and Freddie to expand home ownership in 1999-2002 during his first round with Freddie, and then changed his mind during his second consultation period. That would mean that both Gingrich and Bloomberg's sources are telling the truth, but just in the context of different time frames. That would certainly explain why Gingrich didn't provide them any supporting white papers despite being on a two-year retainer from 2006-8."
Freddie got at least exactly what it wanted and for what it paid: Gingrich's silence.
Morrissey: "Even so, the fact that Gingrich had such a lengthy consulting relationship with such a toxic organization might be enough to turn off Republican voters. The nexus of power and big business is one of the themes of the Tea Party's efforts at reform, and the ability of the powerful to move into consulting relationships with big-money players like Freddie Mac is one of the symptoms of the problem. If anyone could defend their connections to Freddie, it's Gingrich, and we'll see if any defense is possible."
Let's see the Freddie Mac's Gingrich files!
To understand what was going on, one needs to know the history of the Community Reinvestment Act (CRA).
As I set forth on September 29, 2008 in "Blame Obama's ACORN for the Financial Crisis" quoting Wikipedia on the Community Reinvestment Act:
"Clinton Administration Changes of 1995
"In 1995, as a result of interest from President Bill Clinton's administration, the implementing regulations for the CRA were strengthened by focusing the financial regulators' attention on institutions' performance in helping to meet community credit needs.
"These revisions with an effective starting date of January 31, 1995 were credited with substantially increasing the number and aggregate amount of loans to small businesses and to low- and moderate-income borrowers for home loans. These changes were very controversial and as a result, the regulators agreed to revisit the rule after it had been fully implemented for seven years. Thus in 2002, the regulators opened up the regulation for review and potential revision. Part of the increase in home loans was due to increased efficiency and the genesis of lenders, like Countrywide, that do not mitigate loan risk with savings deposits as do traditional banks using the new subprime authorization. This is known as the secondary market for mortgage loans. The revisions allowed the securitization of CRA loans containing subprime mortgages. The first public securitization of CRA loans started in 1997 by Bear Stearns. The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent.
"Other rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks. By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market.
"George W. Bush Administration Proposed Changes of 2003
"In 2003, the Bush Administration recommended what the NY Times called 'the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.' This change was to move governmental supervision of two of the primary agents guaranteeing subprime loans, Fannie Mae and Freddie Mac under a new agency created within the Department of the Treasury. However, it did not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enabled them to issue debt at significantly lower rates than their competitors. The changes were generally opposed along Party lines and eventually failed to happen. Representative Barney Frank (D-MA">www.webcommentary.com/php/ShowArticle.php?id=gaynorm&date=080929 quoting Wikipedia on the Community Reinvestment Act:
"Clinton Administration Changes of 1995
"In 1995, as a result of interest from President Bill Clinton's administration, the implementing regulations for the CRA were strengthened by focusing the financial regulators' attention on institutions' performance in helping to meet community credit needs.
"These revisions with an effective starting date of January 31, 1995 were credited with substantially increasing the number and aggregate amount of loans to small businesses and to low- and moderate-income borrowers for home loans. These changes were very controversial and as a result, the regulators agreed to revisit the rule after it had been fully implemented for seven years. Thus in 2002, the regulators opened up the regulation for review and potential revision. Part of the increase in home loans was due to increased efficiency and the genesis of lenders, like Countrywide, that do not mitigate loan risk with savings deposits as do traditional banks using the new subprime authorization. This is known as the secondary market for mortgage loans. The revisions allowed the securitization of CRA loans containing subprime mortgages. The first public securitization of CRA loans started in 1997 by Bear Stearns. The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent.
"Other rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks. By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market.
"George W. Bush Administration Proposed Changes of 2003
"In 2003, the Bush Administration recommended what the NY Times called 'the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.' This change was to move governmental supervision of two of the primary agents guaranteeing subprime loans, Fannie Mae and Freddie Mac under a new agency created within the Department of the Treasury. However, it did not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enabled them to issue debt at significantly lower rates than their competitors. The changes were generally opposed along Party lines and eventually failed to happen. Representative Barney Frank (D-MA) claimed of the thrifts 'These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.' Representative Mel Watt (D-NC) added 'I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing.'
"Changes of September 2005
"Among banks and the regulatory agencies, there was a consensus that data collection, recordkeeping, and reporting requirements imposed a heavy burden on small community institutions. As a result of a 2002 review of the CRA regulations, and revision of an initial Federal Deposit Insurance Corporation (FDIC) proposal following a public commenting period that was largely negative, the FDIC, Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board (FRB), made substantive changes to the implementation of regulations for the CRA for banks (not thrifts).
"Previously, all institutions over $250 million in assets were subject to a three-part CRA test that covered lending (including community development loans), qualified investments, and services (including community development services) to their assessment areas. Institutions less than $250 million were subject only to a lending test.
"However, as of September 1, 2005, only those institutions with more than $1 billion in assets were subject to the three-part test. Institutions below $250 million remain subject to only a lending test, and a new CRA test was created for institutions with assets between $250 million and $1 billion. This latter category, referred to as Intermediate Small Banks, is subject to the same lending test to which institutions under $250 million were subject, along with a new combined community development test that covers community development loans, qualified investments, and community development services. The $250 million and $1 billion asset thresholds also were indexed to the consumer price index and could change annually. Thus, all institutions remain subject to the CRA test. These substantive changes were intended to be a compromise between changes advocated by banks and community groups.
"However, the changes were not received positively by all community groups. Changes to tests conducted on the Intermediate Small category were viewed by some as decreasing the institutions' obligations to meet lending requirements of low- and moderate-income households. Racial inequities in mortgage acceptance rates (as reported by Inner City Press, the National Community Reinvestment Coalition, ACORN and other groups) are cited as a primary reason to maintain or even increase the scope of the CRA."
Instead of blowing the whistle on Fannie and Freddie, Gingrich chose to be a very well paid consultant.
NOT the choice a person fit to be President of the United States would make.
© Michael Gaynor
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(See RenewAmerica's publishing standards.)
