It Wasn’t the CRA
Unfettered markets led to the financial crisis, but that’s hard for conservative policymakers and pundits to admit. So some have made a target of the 1977 Community Reinvestment Act, which was passed to overcome discrimination in lending. This idea, which started on fringe blogs, simply doesn’t pass the laugh test, writes CAP’s Tim Westrich.
Businessweek’s Aaron Pressman agrees:
Fresh off the false and politicized attack on Fannie Mae and Freddie Mac, today we’re hearing the know-nothings blame the subprime crisis on the Community Reinvestment Act — a 30-year-old law that was actually weakened by the Bush administration just as the worst lending wave began. This is even more ridiculous than blaming Freddie and Fannie.
In fact, that claim was discredited long before conservative columnists started picking it up. Banks went into the subprime market because of the profit motive, not because they were forced to.
Tags: CRA, Deregulation
