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Using race-baiting they bullied the opposition into relaxing lending practices which came to a head in 2007 when the Dems changed lending requirements. It caused a shock to the system at the wrong time causing an acceleration in defaults.
As has continuously been refuted, the CRA did not cause the housing bubble. CRA loans did not default any faster than non-CRA loans. CRA home prices did not rise faster than non-CRA home prices. CRA home prices did not crash further or faster than non-CRA loans. If you believe in the efficacy of the market, then CRA-funded loans must have been at the epicenter of the Housing Bubble, with the biggest gains and worst losses and defaults in those areas. But that is not what happened. Otherwise, you don't believe in the market system and are probably a socialist, even if you don't realize it. I have yet to see anyone making this argument refer to any actual numbers whereas there is plenty of data refuting it.
The GSEs played a part but only a minor one. I have repeatedly asked people who make this argument how the GSEs also caused housing bubbles in Spain, Ireland, the UK, Canada, Australia, Portugal, China, Singapore, etc. US home prices actually lagged many developed countries. Yet the GSEs did not make a single loan that I know of to those countries. How can this be?
Lots and lots of evidence refuting this argument here.
http://www.usmessageboard.com/economy/70006-cra-not-to-blame-for-housing-debacle.html
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