Senator Allen West -- Articles

by **Admin** Tue 15 Feb 2011, 11:23 pm

Source: Investor's Business Daily - Posted 02/14/2011

Reinvest In West

Politics: Too few Republicans have dared speak out against the Community Reinvestment Act, an anti-discrimination banking rule that fed the subprime bubble. Kudos to Allen West for doing so. The freshman congressman from Florida stole the show at this year's Conservative Political Action Conference in Washington with his fiery keynote speech. But what caught our attention was his remarks about the causes of the housing crisis.

West blamed "failed government policies" and the "overburden of regulation." He singled out the CRA for rebuke. "Why did we have a financial meltdown? Go back and study the Community Reinvestment Act," he said. "If government gets out of the way of the private sector, it would not have happened in 2008."

He's right. Washington butted into the housing market to close the "mortgage gap" between whites and blacks. Using the CRA, it steered bank loans to credit-impaired borrowers. The loans failed, the gap is as wide as ever and the mortgage industry is in shambles.

The 30-year-old regulation was really enforced only a decade before the crisis, when President Clinton added teeth to it. The tougher CRA influenced subprime underwriting on both the primary and secondary market, pushed bankers into a fringe market and pressured them to bend lending standards — or else.

Roughly half of subprime lending was directly or indirectly "attributable to the CRA," according to the Federal Reserve. Under pressure from HUD, their affordable-housing mission regulator, Fannie Mae and Freddie Mac bought about 50% of all CRA loans from 2001 to 2007. The dodgy loans helped sink the mortgage giants.

The CRA corrupted the market flow of credit by rechanneling money into risky and unprofitable investments. Bankers didn't make these loans out of the goodness of their hearts. Politicians pushed them into it.

The CRA is a failed social experiment that has backfired on minorities, the biggest victims of subprime foreclosures. Instead of admitting that, CRA boosters brand critics "racists" who "don't care about the poor or minorities." So many conservatives back off the truth.

But such attacks lose their sting on West, a retired Army lieutenant colonel and the first black GOP congressman from Florida since 1876. Expect to hear more candor from him in coming years.

http://www.investors.com/NewsAndAnalysis/Article/563136/201102141852/Reinvest-In-West.htm