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Originally Posted by SIKSUKR
Absolutely forced. Read the bill.
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Again, citation?
If you're talking about the Community Reinvestment Act, it mandates that they offer loans to all qualified individuals without discrimination...not that they ignore safeguards against making unsound loans. The risky loan idea was all from the banks, fueled by the bond market appetite. If it works, they win. If it didn't, FDIC bails them out. There was no mandate, just no downside, and greed kicked in.
From Wikipedia...(I know, it's not the bill itself, but it's a good summarization)
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
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The Community Reinvestment Act of 1977 seeks to address discrimination in loans made to individuals and businesses from low and moderate-income neighborhoods.[7] The Act mandates that all banking institutions that receive Federal Deposit Insurance Corporation (FDIC) insurance be evaluated by Federal banking agencies to determine if the bank offers credit (in a manner consistent with safe and sound operation as per Section 802(b) and Section 804(1)) in all communities in which they are chartered to do business.[3] The law does not list specific criteria for evaluating the performance of financial institutions. Rather, it directs that the evaluation process should accommodate the situation and context of each individual institution. Federal regulations dictate agency conduct in evaluating a bank's compliance in five performance areas, comprising twelve assessment factors. This examination culminates in a rating and a written report that becomes part of the supervisory record for that bank.
The law, however, emphasizes that an institution's CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution. An institution's CRA compliance record is taken into account by the banking regulatory agencies when the institution seeks to expand through merger, acquisition or branching. The law does not mandate any other penalties for non-compliance with the CRA.
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Furthermore...from the bill:
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Sec. 802.
(a) The Congress finds that—
(1) regulated financial institutions are required by law to demonstrate that their deposit facilities serve the convenience and needs of the communities in which they are chartered to do business;
(2) the convenience and needs of communities include the need for credit services as well as deposit services; and
(3) regulated financial institutions have continuing and affirmative obligation to help meet the credit needs of the local communities in which they are chartered.
(b) It is the purpose of this title to require each appropriate Federal financial supervisory agency to use its authority when examining financial institutions, to encourage such institutions to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions.
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Sorry, I don't see anything that requires them to make bad loans, and in fact it says 'consistent with the safe and sound operation', which means to NOT make bad loans.