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Stop Making Excuses for the CRA

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Comments (2)
In one word...Hogwash!
The author echoes the big lie that the financial crisis was caused by the Community Reinvestment Act. Look here, CRA loans are not sub-prime loans, which were the root of the problem. CRA loans met standards for Fannie and Freddie. Unlike subprime loans, CRA loans were not 'no doc' and 'pick-a-pay' mortgages. They did not get securitized privately by the Wall St. houses like Bear Stearns and Lehman. Moreover, subprime loans were originated by mortgage companies not (CRA-regulated) banks e.g., Countrywide, HSBC Finance, New Century Financial, Countrywide Financial, WMC Mortgage (GE sub), First Franklin Financial Corp. (Merrill Lynch sub). How about 2006 top 10 subprime originators Ameriquest and Option One (H&R Block sub)?
Other top subprime originators, like Saxon, Litton and EMC, were owned by Wall Street, Morgan Stanley, Goldman Sachs and Bear Stearns, and fed their toxic subprime securitization engines. Finally, in 2006, 1.5 trillion in non-agency mortgages was originated versus 1 trillion by the GSEs. The non-agency originations included jumbos, Alt-A and 600MM in subprime!
Enough already with putting a political spin on on history. Face the facts.
Posted by andkel | Tuesday, January 29 2013 at 9:52AM ET
Yes. And while CRA advocates and community leaders were trying to alert the regulatory agencies, as we watched our neighborhoods become deluged with foreclosure notices, the regulators told us emphatically that these loans were from sources that they had no control over because they were not CRA regulated institutions. CRA proponents never advocated the kinds of lending products that brought down the financial system.
Posted by DCR2010 | Tuesday, January 29 2013 at 4:07PM ET
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