Wednesday, March 04, 2015

Here we go again. The CRA to the rescue.

We can get an idea of how collectivists think from this oped in the Detroit News of 2/27/15. The author, Ms. Kathleen Rogers, is president and CEO Earth Day Network, a left wing environmental group. The title is "The meaning of community reinvestment" and it is revealing in terms of the statist principle it represents: government intrusion into the market place to achieve some alleged social good.

The theme of the oped is that "...25 percent of the energy used in schools is wasted" and if that waste can be eliminated by getting schools to go green then there will be money that can be  "...used for desperately needed funding for additional teachers and school resources."

Ms. Rogers gives several examples of schools that have benefited from going green then suggests ways to find the funds for the poorest schools to go green.

"What if we could secure billions of new, private dollars for school energy-efficiency projects in low-income disadvantaged areas and allow the resulting energy savings to remain with each school?"
So, what does "secure billions" mean? Is it asking for private loans or voluntary donations? Nope.

"The next frontier of green school funding could come from banks through the Community Reinvestment Act (CRA), a federal law that requires (read 'forces'-MN) banks operating in low-income areas to invest significant amounts of money in these areas, usually in the form of loans and grants for economic development projects, low-income housing projects and community centers."

How is it that banks "operating in low-income areas" have all these billions just laying around waiting for the right altruist to come along and point a legislative gun at their heads for such a noble and virtuous redistribution? How did the billions get here? Blank out! It's just here in banks. Notice that all these billions of private money are viewed as the "next frontier" to be "secured". But this frontier is not a new one. It was used before with equally, noble intentions but with disastrous results.

"From 1996 to 2008, banks invested more than $1 trillion in community development and small-business loans in low-income areas in part to score CRA points."
This is certainly true but that trillion dollars, through credit expansion has morphed into many trillions more in derivative debt held all throughout the economy which can't be repaid. This fact was a key player in the mortgage meltdown of 2008 throwing millions of people out of their homes and jobs. You'd think that someone in the educated class would call for the repeal of the CRA if for no other reason than the human suffering it caused. But no, the desire to use the brute force of government to achieve some social good is irresistible to the collectivist/altruist mind. And so it continues:

"Banks take the CRA requirement seriously because the (obedience-MN) points they earn are a determining factor when regulators review requests for mergers and acquisitions." 
I would take a legislative gun pointed at my head seriously too.

"The litmus test for whether banks will receive CRA points is satisfied only if the "benefits" that accrue from these investments remain in the low-income communities.
Now the Office of the Comptroller of the Currency, the bank's regulator, has proposed a clarification that will allow banks to get CRA credit for investing in energy efficiency in low-income communities."
Great. Another noble cause for which we can use the CRA to "secure billions"! Ms.Rogers concludes with:

"Leaving those energy savings with the school, which allows banks to invest in energy retrofits under the CRA, would open the door to low interest loans or grants. It's a win-win proposition for our nation's poorest schools."
Actually, no it isn't. It will just be another boondoggle. How will the banks get their money repaid if it is to stay with the school? And this notion that banks have billions just laying around not invested in anything is well, absurd.

 The real meaning of community reinvestment is wealth redistribution by force, or as Ayn Rand once said, a policy of have gun will nudge.

Finally, the social system in which businesses (like banks) are nominally privately owned while the right of ownership-the right of use and disposal-is retained by the government, is fascism. That is where we are headed.


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