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More Consumers Union Nonsense

January 2nd, 2009 Leave a comment Go to comments

Another amusing thread on the issue du jour. Read from the bottom up.

Nameless CU Flack:

I find your bona fides from advocacy groups unpersuasive. Many of these same groups are responsible for substantial lobbying efforts to block further regulatory oversight of the primary buyers of mortgages for packaging into securities, e.g. GSEs Fannie Mae and Freddie Mac.

Have you read a Community Reinvestment Act Performance Evaluation from a bank that is in “substantial noncompliance”? I have and am not in the banking or investment field and have zero financial interest in same. It’s rather obvious to anyone with critical thinking skills what’s required to move from the noncompliant status. Excerpt: “The bank does not use any innovative or flexible lending practices or products to target low- and moderate-income borrowers.” No matter the language stating “safe and sound loans”, the actual CRA reports influence business behavior. Reference: http://www.chicagofed.org/cra_pes/2001/850036.pdf

It simple to anyone with a basic understanding of economics: Gov’t intervention/mandates + politics = market distortions = failure = taxpayer bailout or at the minimum increased cost

There’s plenty of blame to spread around and Wall Street investment banks made serious errors in buying these securitized mortgages as did anyone taking a stated income ARM for $500k when they’re making $12/hr. But to place all the blame on the former is disingenuous.

Unless you’re willing to engage in substantive debate rather than a forward of advocacy group talking points, do not email me again on this topic.


Ron Bischof

On Oct 30, 2008, at 1:52 PM, action@cu.consumer.org wrote:

Statement from National Civil Rights, Consumer, Community Development and Housing Groups Regarding Attacks on the Community Reinvestment Act (CRA)
Washington, DC – The following group of civil rights, consumer, community development, and housing groups today made the following statement:

Recent conversations pointing to the Community Reinvestment Act as the cause of the foreclosure crisis and credit market crisis are an attempt to deflect attention away from the real problem affecting our financial system. That problem is failed regulatory policy and oversight.

For more than a decade, community leaders, civil rights proponents and housing groups have raised concerns about unfair, deceptive and abusive lending practices that have undermined homeownership aspirations for millions of working families. Those pleas for better regulatory policy and oversight not only went ignored, in some cases they were contradicted by regulatory policy that made predatory lending more virulent and prevalent in low-income neighborhoods and communities of color.

Over that same period, thousands of pages of local, state and federal testimony, peer reviewed policy papers and speeches (many from the groups signed onto this statement) have forewarned of a pending crisis stemming from lax regulatory oversight and enforcement. Yet no serious federal response was made. As Harvard University law professor Elizabeth Warren has artfully stated, consumers had better protection buying a toaster or microwave oven than they had when purchasing the family home.

One example of regulatory failure is that many vital financial institutions – and the products they created and sold — were not covered by meaningful regulation. Some market players clearly knew their actions were creating a potential market crisis. A Securities and Exchange Commission (SEC) Report recently found that in December of 2006 one analytical manager at a prominent credit rating agency wrote to another senior analytical manager to say “let’s hope we are all wealthy and retired by the time this house of cards falters.”

Improved regulation of the financial system – including brokers, lenders, appraisers, rating agencies and securitizers – was essential. If the Community Reinvestment Act – and other appropriate regulation — had been applied to independent mortgage companies and other non-bank financial institutions, it is likely that our nation would not be confronted with a foreclosure crisis. Critics of the law conveniently ignore that about 75 percent of sub-prime loans were not covered by CRA. They also ignore the fact that most reckless and damaging subprime lending occurred between 2003 and 2007, long after CRA’s passage in 1977.

CRA exams provide clear and strong incentives for banks to make safe and sound loans and penalize them for making loans that are unfair and abusive. CRA is an antidote, not a cause of the current crisis.
Signed by:

Accion USA / Chicago / New Jersey / New York

Center for American Progress

Center for Responsible Lending

CDFI Coalition

Consumer Action

Consumer Union

Consumer Federation of America

Dēmos: A Network for Ideas & Action

Enterprise Community Partners

Housing Assistance Council

Lawyers’ Committee for Civil Rights Under Law

Leadership Conference on Civil Rights

Local Initiatives Support Corporation


National Association of Consumer Advocates

National Alliance of Community Economic Development Associations

National Community Reinvestment Coalition (NCRC)

National Consumer Law Center (on behalf of its low income clients)

National Council of La Raza

National Council of Negro Women

National Housing Conference

National Housing Institute

National League of Cities

National Low Income Housing Coalition

National NeighborWorks Association

National Policy and Advocacy Council on Homelessness (NPACH)

National Rural Housing Coalition

National Urban League

Opportunity Finance Network

Rainbow PUSH Coalition

US Conference of Mayors


Pamela Banks


—– Original Message —–

From: Ron Bischof

To: action@cu.consumer.org

Sent: Saturday, October 18, 2008 6:30 PM

Subject: Re: A Sobering Time (for blame shifting & nanny state activism) (Fwd By Digital Impact)

Mr. Guest:

Please spare me the current iteration of Big Gov’t cheerleading that overlooks the role of GSEs and the Community Reinvestment Act in the hopes that recipients are ignorant to the consequences of government intervention in market behavior.

This is merely your current platform in a career of activism for the nanny state and socialistic policies. It has little to do with informing consumers about products/services from productive sectors of society and everything to do with politics. As a result, I’ve engaged in a little activism of my own and non-renewed my Consumer Reports magazine and Health newsletter subscriptions. And now, I’m unsubscribing from these emails.

May you receive all the government you deserve as you and your ilk squander our heritage of freedom and limited government.


Ron Bischof

On Oct 15, 2008, at 7:06 AM, Consumer Reports Advocacy wrote:

Dear Ron,

You watched helplessly as the stock market sank. Then Washington
prepared a $700 billion dollar rescue for Wall Street without
ensuring an end to the practices that caused the problem in the
first place.

Where was the “cop” when the financial institutions engaged in
a frenzy of gambling on complicated new investments and bad
loans? Well, there was no “cop,” and there were very few rules.

After years of deregulation, financial institutions got used to
doing exactly what they wanted. And we got deceptive mortgage
loans, credit card rip-offs, and now a credit crunch and a near
collapse of the stock market that’s hurting individual Americans
like you.

It’s time to tell lawmakers to get serious about holding
corporations accountable for their actions

No longer do we want our government to stand idly by while
corporations ship unsafe foods and products to our local stores.
No longer do we accept that sick people without health insurance
must just file for bankruptcy as their only solution.

This is a serious time. We need a new approach.

Take a moment right now to call for real change.

Then, please take another moment to forward this on to others,
your friends and family, who may also want to help jumpstart
a new approach to governance that respects you and holds
corporations to a higher standard.


Jim Guest

Consumers Union of the U.S.
Nonprofit publisher of Consumer Reports
101 Truman Ave.
Yonkers, NY 10703

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