You're Kidding

Fed Bank Regulatory Powers: The Dog That Didn't Bark?

samjohn wrote:

When ever their was a conflict between safety
and soundness and CRA (Community Reinvestment Act) CRA won. This
was not the fault of the cops on the beat, their hands were tied
by policy in DC. (read Congress).

----------------------...

I keep hearing about the CRA like it is some big deal that is responsible for the the housing meltdown. Yet, from one source I read (can't remember where) it said that only 17% of lenders fell under CRA guidelines, and only one of the top 25 lenders did.

So I went to Wikipedia

en.wikipedia.org/wiki/...

and got this:

Some legal and financial experts note that CRA regulated loans tend to be safe and profitable, and that subprime excesses came mainly from institutions not regulated by the CRA. In the February 2008 House hearing, law professor Michael S. Barr, a Treasury Department official under President Clinton,[66][36] stated that a Federal Reserve survey showed that affected institutions considered CRA loans profitable and not overly risky. He noted that approximately 50% of the subprime loans were made by independent mortgage companies that were not regulated by the CRA. Another 25% to 30% came from only partially CRA regulated bank subsidiaries and affiliates. He stated that institutions fully regulated by CRA made "perhaps" one in four sub-prime loans. Referring to CRA and abuses in the subprime market, Michael Barr stated that in his judgment "the worst and most widespread abuses occurred in the institutions with the least federal oversight".[67] According to Janet L. Yellen, President of the Federal Reserve Bank of San Francisco, independent mortgage companies made "high-priced loans" at more than twice the rate of the banks and thrifts; most CRA loans were responsibly made, and were not the higher-priced loans that have contributed to the current crisis.[68]

Based on what I have seen, most people who mention the CRA want to use it as a way to put responsibility for the housing bubble on poor people and the government. But they never mention any statistics to back that belief up.

There is more info and history on the CRA at the above source for those of you who consider factual statistics more important than empty generalizations when you try and make a point.