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Economic History 101, Individual Vs. Government Initiative: The Great Leap Forward

The agricultural economy of the late 1950's largely resembled that of the Nationalists prior to Mao's ascension to power, characterized by peasant farmers tilling small plots on which they had some form of claim of ownership or tenancy, the latter of which dated from the time of China's last dynasty, the Qing line. All that changed in 1957 with the policy known as the Great Leap Forward, its major policy elements being the redirection of labor Read More »

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Was Joe Paterno Really That Generous?

Many of those defending Joe Paterno's legacy point to his involvement in and giving to many projects at the University. At the press conference of the Penn State University Board of Trustees on the release of the Freeh Report, Trustee Kenneth Frazier was quoted as saying, that the report found "inexcusable failures on the part of Joe Paterno and others to protect children. But I'd also say Joe Paterno did a lot of tremendous things in Read More »

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Ford and the Auto Bailout…

The visit of President Barack Obama to Detroit yesterday gave the Administration ample opportunity to crow about the Government led auto bailout of 2008. "If it was up to the Republican Party, Chrysler and General Motors would not have been here," UAW Secretary-Treasurer Dennis Williams told the crowd of thousands "If it wasn't for President Obama, we would not have the opportunity to once again build the best cars and trucks in the whole world." I should Read More »

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Obama and Motown….

President Obama apperared today in my hometown, the city of wheels, Detroit, MI. Although in the grand and beautiful state of Michigan for the Labor Day weekend, I did not venture into the Motor City to hear the President speak, instead choosing to stay in a quintessentially Michigan setting near a lake and tune into it on C-Span. What I was treated to via the helfpful public affairs channel was vintage Barack Obama at his Read More »

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AT&T and T-Mobile: Troubled Reasoning Despite Good Policy

While I applaud the decision of the Department of Justice to file suit to block the merger of AT&T and T-Mobile as a sound free-market and pro-competive decision, recent quotes from Administration officials leave us to believe that this positive and constructive move may be more of a case of a blind squirell finding a nut than any sort of visionary and sound policy posture. Moreover, in reading the reviews of this action, I Read More »

Category Archives: Domestic Policy

So, the Community Reinvestment Act Incented Risky Lending Afterall

From the Digest of a recent study by the Bureau of Economic Research:

 

Did the Community Reinvestment Act (CRA) Lead to Risky Lending?

Yes, it did. We use exogenous variation in banks’ incentives to conform to the standards of the Community Reinvestment Act (CRA) around regulatory exam dates to trace out the effect of the CRA on lending activity. Our empirical strategy compares lending behavior of banks undergoing CRA exams within a given census tract in a given month to the behavior of banks operating in the same census tract-month that do not face these exams. We find that adherence to the act led to riskier lending by banks: in the six quarters surrounding the CRA exams lending is elevated on average by about 5 percent every quarter and loans in these quarters default by about 15 percent more often. These patterns are accentuated in CRA-eligible census tracts and are concentrated among large banks. The effects are strongest during the time period when the market for private securitization was booming.

The full study may be downloaded/purchased here.

What is certain about all of this is that the partisan divide in our politics will never allow real solutions.  We will remain hogtied with banks that are too big to fail, decreasing competitiveness in the finance sector due to contrived regulation, delusional faith in government solutions to problems with millions of variables, and oversimplification of the problems that people fear…

 

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