Ok let's start.
First the comment referred me to a News Release from HUD about Bush Signing
the American Dream Downpayment Act on December 16, 2003. So I started
there.
http://www.hud.gov/news/release.cfm?content=pr03-140.cfm
Then
I had to find this bill to see who Sponsered it.
http://www.govtrack.us/congress/bill.xpd?bill=s108-811
Oh this is looking bad for the Republicans if you stop there. But let's try
to go back to the source remember those wooden arrows.
Looking further down the page we see that this bill also had other names at
one time so let's list them and see where they lead.
Last
Action:
Dec 16, 2003: Became Public Law No: 108-186.
Other
Titles:
-- FHA Multifamily Loan Limit Adjustment Act of 2003
-- HOPE VI Program Reauthorization and Small Community Mainstreet
Rejuvenation and Housing Act of 2003
-- LEGACY Act of 2003
-- Living Equitably: Grandparents Aiding Children and Youth Act of
2003
Let's start at the top of this list with the FHA Multifamily Loan Limit
Adjustment Act of 2003.
We
will do the same thing who Sponsered this bill?
My goodness Some people we see are not Republicans.
What is this bill about? Let's check the summary shall we?
10/3/2003--Introduced.
FHA Multifamily Loan Limit
Adjustment Act of 2003 - Amends the National Housing Act to increase high-cost
area and project-based additional mortgage loan limits for Federal Housing
Administration (FHA)-insured mortgages for: (1) rental housing; (2) cooperative
housing; (3) rehabilitation and neighborhood conservation housing; (4) moderate
income and displaced family housing; (5) housing for the elderly; and (6)
condominiums.
Increases: (1) "amount per
space" rental housing mortgage limits; and (2) certain cooperative housing
mortgage limits.
Moveing on we will go to
Hope VI Program Reauthorization and Small Community Mainstreet Rejuvenation and
Housing Act of 2003.
Who
Sponsored this bill. (Please note the name James Leach my goodness the Head of
Republicans for Obama and he even gave a speech at the Democratic convention.
Also see my post Connect the Dots for more information about our popular Mr.
Leach.)
Let's look at a summary of
this bill.
6/19/2003--Reported to
House, amended. (There is 1 other summary)
HOPE VI Program
Reauthorization and Small Community Mainstreet Rejuvenation and Housing Act of
2003 -
Section
2 -
Amends the United States
Housing Act of 1937 to revise criteria for HOPE VI (urban revitalization
demonstration program) grants, including addition of criteria regarding tenant
displacement, existing tenant occupancy priority, and timeliness of project
completion.
Revises the definition of
"severely distressed public housing" to include: (1) buildings or projects that
include very low-income elderly or nonelderly disabled persons; and (2) areas
lacking sufficient affordable housing, transportation, supportive services,
economic opportunity, schools, civic and religious institutions, and public
services.
Authorizes FY 2004 and 2005
appropriations. Extends program authority through September 30,
2005.
Section
3 -
Includes within the
program's purposes assisting smaller communities to provide affordable
low-income housing in connection with main street revitalization or
redevelopment projects.
Authorizes main street
grants (maximum $1 million per year) to smaller communities for affordable
low-income housing in a commercial area in connection with an eligible
project.
Requires that a project be
focused on: (1) joint public-private revitalization or redevelopment of a
historic or traditional commercial area; and (2) affordable housing rather than
severely distressed public housing.
Defines "smaller community"
as a local government unit that: (1) has a population of under 30,000, and is
without a public housing agency; or (2) has a public housing agency that
administers 100 or fewer public housing dwelling units.
Defines "affordable
housing" as rental or homeownership units that are made available for initial
occupancy subject to the same income and occupant contribution rules as dwelling
units in public housing projects assisted with HOPE VI grants.
Obligates up to five
percent of HOPE VI appropriations for smaller community
grants.
My goodness now we are seeing how this bill is
evolveing and just who is envolved.
Now we will move on to the
Legacy Act of 2003
Who
were the sponsors of this bill?
Once again the summary of
the bill.
2/12/2003--Introduced.
Living Equitably:
Grandparents Aiding Children and Youth Act of 2003 (Legacy Act of 2003) -
Directs the Secretary of Housing and Urban Development to carry out: (1) a
five-year pilot program in connection with the supportive housing program to
provide assistance to private nonprofit organizations for expanding the supply
of intergenerational dwelling units for intergenerational families (families
headed by an elderly person); and (2) a five-year demonstration program for
section 8 rental assistance to families headed by a grandparent or relative who
is raising a child.
Makes grandparent-headed
and relative-headed families eligible for: (1) family unification assistance
under the United States Housing Act of 1937; (2) Home program ECHO units under
the Cranston-Gonzalez National Affordable Housing Act; and (3) fair housing
initiatives education, counseling, and outreach under the Housing and Community
Development Act of 1987.
Amends the Department of
Housing and Urban Development Act to provide Department of Housing and Urban
Development personnel with related training.
Directs the Secretary and
the Director of the Bureau of the Census to conduct a joint study of such
families' housing needs.
Looks like it might be as
cut and dry as to Bush being the sole owner of the blame on this mess as the
person who left the comment for me sudjests. You be the judge.
As for the Greenspan link
the person who commented provided. First that is from May 18, 2001 this
SNOWBALL FROM HE-L BILL was signed into law December 16, 2003.
Mr. Greenspan's words
should be read and understood he give a history of what has happned in the past
with bank failures.
Just a small sample from
what Mr. Greenspan said.
Pro-Cyclicality of Bank Lending and Agency Supervision
A
typical--one may almost say predictable--bank lending pattern is an easing of
lending terms as the economy recovers from a cyclical trough and a tightening as
the economy peaks and then contracts. At the same time, one can also observe
what appears to be less aggressive supervisory criticism of lending policies
during the economic expansion and an apparent get-tough policy at cyclical peaks
and during contractions. Both of these phenomena can be explained by rising
optimism followed by a pulling back and heightened caution. As such, they may be
just an implicit part of the dynamics of the business cycle. But neither are
demonstrably in the best interests of the economy or the bank’s shareholders.
They lead to an unnecessary degree of volatility in earnings and, as such, to a
reduced long-term capitalized value of the bank. This, in turn, lessens the
effectiveness of financial intermediation. Fortunately, there is some evidence
that desirable changes have already begun, changes that both private and public
policymakers should reinforce.
Historically, as I have said, loan standards are softened during an
expansion, when loan books are growing rapidly. As the economy expands, business
and household financing needs increase and projections of future outcomes are
optimistic. It is difficult for managers and supervisors to be critical of loan
growth in such an environment, particularly one marked by intense competition.
In addition, incentives for loan officers and managers traditionally have
rewarded loan growth, market share, and nominal profits. In an effort to expand
loans in an optimistic environment, potential returns are often not fully
adjusted for risk, with the nominally high-yielding credit looking particularly
attractive. Moreover, credit specialists at banks--a function often separated
from the loan officers-- historically have had difficulty making their case
about risk because of their inability to measure and quantify risk. At the same
time, with debt service current and market risk premiums cyclically low, and
with the same inability to quantify and measure risk, supervisory criticisms of
standards are difficult to justify. When the economy begins to slow and the
quality of some booked loans deteriorates, loan standards belatedly tighten and
supervisors’ criticism of previous standards is taken more seriously, inducing
an even greater tightening of credit. In part, the examiners’ observations have
often provided a reality check by which some banks came to recognize a
deterioration at first denied.
The last few years have had some of the traditional characteristics I have
just described: the substantial easing of terms as the economy improves, the
rapid expansion of the loan book, the deterioration of loan quality as the
economy slows, and a cumulative tightening of loan standards. But this interval
has had some interesting characteristics not observed in earlier expansions.
First, in the mid-1990s, examiners began to focus on banks’ risk management
systems and processes; at the same time, supervisors’ observations about
softening loan standards came both unusually early in the expansion and were
taken more seriously than had often been the case. The turmoil in financial
markets in 1998 associated with both East Asia and the Russian default also
focused bankers’ attention on loan quality during the continued expansion in
this country. And there was a further induced tightening of standards last year,
months before the aggregate economy weakened, in response to early indications
of deteriorating loan quality.
All of this might have been the result of idiosyncratic events from which
generalizations should not be made. Perhaps. But at the same time another, more
profound development of critical importance had begun: the creation at the
larger, more sophisticated banks of an operational loan process with a more or
less formal procedure for recognizing, pricing, and managing risk. In these
emerging systems, loans are classified by risk, internal profit centers are
charged for equity allocations by risk category, and risk adjustments are
explicitly made. In short, the formal measurement and quantification of risk has
begun to occur and to be integrated into the loan-making process. This is a sea
change--or at least the beginning of one. Formal risk management systems are
designed to reduce the potential for the unintendedacceptance of risk and
hence should reduce the pro-cyclical behavior that has characterized banking
history. But, again, the process has just begun.
The federal banking agencies are trying to generalize and institutionalize
this process in the current efforts to reform the Basel Capital Accord. The
proposed foundation approach, intended mainly for regional banks, and the
advanced internal risk-based approach, intended mainly for large, complex
banking organizations, would require banks to create and use internal risk
classifications for their banking book. These classifications would not only be
used to establish minimum regulatory capital, but the associated risk profiles
would be disclosed by the bank for the review of its creditors and shareholders.
How well this process works will depend on the supervisors’ skill and, for lack
of a better word, toughness in validating the conceptual and empirical basis of
the risk classifications and management system. A weak or misused classification
system would destroy the process.
If applied seriously, and when operational near the middle of this decade,
the revised accord, Basel II, promises to promote not only better risk
management over a wider group of banks but also less-intrusive supervision once
the risk management system is validated. It also promises less variability in
loan policies over the cycle. To be sure, banks’ risk appetites can change as
they decide to increase or decrease the riskiness of their loan portfolios. In
addition, minimum regulatory capital might tend to be pro-cyclical as loans
migrate from less- to more-risky classifications as the economy weakens, in the
process increasing minimum capital requirements. This tendency must, however, be
balanced against what should be the reduction in cyclical reserving and
write-offs that traditionally have come with the late recognition of excess risk
taken earlier. Moreover, if, as promised, better risk-management reduces the
variance of charge-offs and earnings, bank equity values, to repeat, are likely
to be rewarded with higher price-earnings ratios. Put somewhat differently,
better risk management and supervision may well focus bank management on its
real objective: maximizing shareholder wealth.
Building on Market Practice
In setting boundaries and minimum
standards for banks, we typically look at industry practices to identify what
works well and what does not. In almost all cases, that’s the correct
approach--to build on industry practice. Indeed, the development of the Basel II
capital proposals I have just discussed has been constructed on the principles
developed initially by the best-practice banks.
We should encourage all banking organizations to continually strengthen their
systems and controls as their operations and market practices evolve. But we
need not expect--and surely not require--significant numbers of banks to develop
risk management systems that are more complex than they need. Simplicity can
work well, too, and for most banks that is likely to be the best approach. For
the vast majority of U.S. banks, current practices, as I noted, seem fine.
It is, of course, our belief that, for the larger banks, improving the
measurement and management of risk will provide bank supervisors with more
reliable and efficient ways to evaluate a bank’s financial health. That thought
underlies the concept of risk-based supervision and our increased focus on
internal processes and controls. If we can gain greater confidence in a bank’s
operating procedures and in its own evaluation of risk, we should be able to
reduce our oversight role--certainly when compared with what would otherwise be
required.
Innovative Banking System
The management principles adopted by U.S.
banks, our capital market system, and our oversight regime have worked well, I
believe, in providing this country with a healthy and responsive banking system
and probably the most efficient allocation of financial resources in the world.
Much of that success relies on the effective measurement of risk, on high levels
of competition, and on arm’s length transactions. Indeed, these elements support
one another: competition requires institutions to correct mistakes quickly and
assess risks as accurately as they can, while independent decision-making helps
ensure that pricing reflects risk. Sound pricing, in turn, produces good returns
to investors and spurs further competition.
Despite more than a decade of consolidation, the U.S. banking system remains
highly competitive on virtually every front. With enhanced technology and
deregulation we now have global and national markets for a growing number of
banking products, while low barriers to entry encourage competition in more
sectors than ever before. The pace of bank creation has actually increased in
recent years, despite the contraction in the overall number of insured
commercial banks. Interstate banking has also brought new competitors into
previously settled markets, and Gramm-Leach-Bliley has the prospect of adding
more competition, as nonbank firms seek entry into the banking business. Even
when these events simply change the ownership of existing banks, one could still
argue that, in most cases, they introduce stronger, more aggressive competitors
into a market.
The role of bank regulators is, of course, to ensure that all of these
activities do not reduce the safety and soundness of banks. In recent years,
state bank regulators have worked well together and with their federal
counterparts in accommodating interstate banking and minimizing oversight costs
to both the supervisors and to state-chartered institutions. Now,
Gramm-Leach-Bliley has introduced nonbank activities and functional regulators
into the mix. In moving forward into new areas, the Federal Reserve will strive
to build on the long tradition of coordination and cooperation with state bank
supervisors in ensuring that the broader activities of financial holding
companies remain adequately supervised and regulated.
On numerous occasions last year, Federal Reserve staff met with staff members
of the Securities and Exchange Commission, various state insurance commissions,
and other state and federal bank supervisors in a mutual effort to learn more
about each other’s interests and how our role as umbrella supervisor can mesh
best with their activities. It is important that we maintain this cooperative
process and work to make supervision as efficient as it can be.
Conclusion
In recent years, we have incorporated innovative ideas
and accommodated significant change in banking and supervision. Institutions
have more ways than ever to compete in providing financial services. Financial
innovation has improved the measurement and management of risk and holds
substantial promise for much greater gains ahead.
It seems clear that, building on bank practice, we are in the process of
developing an improvement in both lending and supervisory policies that will not
only foster better risk management but could also reduce the pro-cyclical
pattern of easing and tightening of bank lending, and accordingly increase bank
shareholder values. It is not an easy road, but it seems that we are well along
it.
I want to thank the person who left the comment for me. I am sure my
research did not turn out to prove the point he was trying to make. Infact it
has only pointed back to some Democrats and Republicans.
I enjoyed this research as I hope all who read this post will. Please feel
free to link back to it or to copy and use as you desire.