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I blame the CRA, of course

August 2, 2011 - Harry Eagar
According to Bloomberg News:

"Late payments on commercial mortgages bundled and sold as bonds rose the most in more than 12 months, adding to concern that the market is deteriorating three years after the financial crisis choked off funding to borrowers."

If you've been following RtO, you know the drill according to the rightwing: The market collapse was caused because Barney Frank forced banks to make lousy residential loans to poor Guatemalan immigrants so he could -- somehow -- pay off his political cronies. Nothing to do with corrupt bankers multiplying sucker loans to, well, suckers.

And Barney's instrument was the Community Reinvestment Act.

This never made the slightest sense. One reason, among many, was the that loans that could not be touched by the cRA were just as bad as, and often a lot worse than, home mortgage loans. (They were not, by and large, being taken out by brown-skinned people, which reduced their attractiveness to rightwingers as bogeymen.)

Take, for example, commercial real estate loans. The securitized ones are about 10% delinquent, which is just as bad as residential mortgages that were securitized.

Lenders have learned their lesson, sort of. According to the report -- worth reading in its entirety -- new commercial loans sold as bonds are running about 10% of 2008 levels.

Want to know why the economy has not revived and why jobs are not being created?

Look no further.


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