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CRA Not to Blame for Housing Debacle
- Thread starter Toro
- Start date
EdwardBaiamonte
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yes, who could say with a straight face that with over 62 government agencies and programs all trying to get people into homes the Republican free market said they could not afford that liberal government was not responsible for the current depression?
The idea that the CRA was a big contributor to the housing debacle keeps popping up. Thus, I'm creating a new thread to refute this assertion.
The San Francisco Fed says that the CRA was not a primary contributor to the housing bubble.
A pair of economists from the Federal Reserve Bank of San Francisco added another piece of evidence to the case that the 1977 Community Reinvestment Act wasn’t the cause, or even a major contributor, to the subprime mortgage debacle.
In a paper focused on California that was presented at a Fed conference on housing and mortgages in Washington, D.C., Elizabeth Laderman and Carolina Reid say the data “should help to quell if not fully lay to rest the arguments that the CRA caused the current subprime lending boom by requiring banks to lend irresponsibly in low and moderate-income lenders.” Fed governor Randall Kroszner made a similar case earlier this week.
Among the specific findings in “Lending in Low- and Moderate-Income Neighborhoods in California: The Performance of CRA Lending During the Subprime Meltdown”:
# Overall, lending to low and moderate income communities comprised only a small share of toal lending by CRA lenders, even during the height of the California subprime lending boom.
# Loans originated by lenders regulated under CRA in general were “significantly less likely to be in foreclosure” than those originated by independent mortgage companies that weren’t covered by CRA.
# Loans made by CRA lenders within their geographic assessment areas covered by the law were “half as likely to go into foreclosure” as those made by the independent mortgage companies.
# 28% of loans made by CRA lenders in low income areas within their geographic assessment areas were fixed-rate loans, compared with 18.2% of loans made by independent mortgage companies in low income areas.
# 12% of the loans made by CRA lenders in these areas were high-priced loans, a technical definition of subprime, compared with 29% of the loans made by those lenders outside their assessment areas and 52.4% of loans made by independent mortgage companies in low-income areas.
Real Time Economics : Don't Blame CRA (The Sequel)
Federal Reserve governor, Randall Kroszner, says the CRA had little effect on home prices.
The “striking result,” Kroszner said: “Only 6% of all the higher-priced loans were extended by CRA-covered lenders to lower-income borrowers or neighborhoods in their CRA assessment areas, the local geographies that are the primary focus for CRA evaluation purposes.”
“This result undermines the assertion by critics of the potential for a substantial role for the CRA in the subprime crisis. In other words, the very small share of all higher-priced loan originations that can reasonably be attributed to the CRA makes it hard to imagine how this law could have contributed in any meaningful way to the current subprime crisis.” Banks can also meet CRA obligations by buying loans from mortgage brokers, he noted. But less than 2% of the higher-priced loans (those would help banks meet CRA requirements) sold by independent mortgage companies were purchased by CRA-covered institutions.
Real Time Economics : Fed's Kroszner: Don't Blame CRA
FDIC Chairwoman, Sheila Bair, and Comptroller of the Currency John Dugan say that the CRA was not a significant factor.
FDIC’s Bair Sets to Shatter CRA “Myth” : HousingWire || financial news for the mortgage market
it pops up because of racists who want it to be the cause.
in reality it wasn't even a blip compared getting rid of glass-steagall and the systematic defunding of regulatory agencies under the bush administration.
yes, who could say with a straight face that with over 62 government agencies and programs all trying to get people into homes the Republican free market said they could not afford that liberal government was not responsible for the current depression?
do you ever post anything that isn't a lie or horrifically uninformed?
EdwardBaiamonte
Platinum Member
- Nov 23, 2011
- 34,612
- 2,153
- 1,100
yes, who could say with a straight face that with over 62 government agencies and programs all trying to get people into homes the Republican free market said they could not afford that liberal government was not responsible for the current depression?
do you ever post anything that isn't a lie or horrifically uninformed?
please say what the lie or misinformation is or admit as a liberal that you lack the IQ to do so.
yes, who could say with a straight face that with over 62 government agencies and programs all trying to get people into homes the Republican free market said they could not afford that liberal government was not responsible for the current depression?
do you ever post anything that isn't a lie or horrifically uninformed?
please say what the lie or misinformation is or admit as a liberal that you lack the IQ to do so.
i'd have to go through every one of your posts because they're all pretty much lies and extraordinary ignorance.
As to CRA, there was no requirement that banks loan money to bad risks. what they couldn't do was discriminate racially.
oh no!!! the horror... they weren't allowed to redline!
there were about half a dozen other causes of the crash.. .mostly stemming from the immoral and probably illegal gambling that investment houses did with respect to mortgages.
Quite a convincing array of evidence from multiple sources
Vs.
in reality it wasn't even a blip compared getting rid of glass-steagall and the systematic defunding of regulatory agencies under the bush administration.
No source that the SEC or any financial industry regulatory agency was "defunded" during the Bush Administration.
I'm afraid the scales of credability are not in your favor, my dear.
EdwardBaiamonte
Platinum Member
- Nov 23, 2011
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As to CRA, there was no requirement that banks loan money to bad risks. what they couldn't do was discriminate racially.
For the first time, banks were required to show results. One of the five performance criteria in the "lending test" the most heavily weighted component of the CRA exam was adopting "flexible lending practices" to address the credit needs of poor borrowers in "predominantly minority neighborhoods." Banks that didn't bend their underwriting rules risked flunking the exam.
Ex-Federal Reserve Board Gov. Lawrence Lindsey, a staunch CRA defender, acknowledges that the changes "did contribute to a downgrading of credit standards."
FICTION: "Many of these (CRA) loans were not very risky," the FCIC report claims.
FACT: Studies show that CRA loans have higher delinquencies and defaults and act as a major drag on bank earnings. In 2008, CRA loans accounted for just 7% of Bank of America's total mortgage lending, but 29% of its losses on home loans. Also, banks with the highest CRA ratings tend to have the lowest safety and soundness ratings.
FICTION: Only 6% of subprime loans were originated by banks subject to the CRA, so the vast majority of risky lending was not tied to the law.
FACT: Among other things, the figure does not count the trillions of dollars in CRA "commitments" that WaMu, BofA, JPMorgan Chase, Citibank, Wells Fargo and other large banks pledged to radical inner-city groups like Acorn, Greenlining and Neighborhood Assistance Corp. of America (NACA) after they used the public comment process to protest bank merger applications on CRA grounds.
All told, they shook down banks for $4.6 trillion in such commitments before the crisis, boasts a report by the National Community Reinvestment Coalition, or NCRC, the nation's top CRA lobbyist (which conveniently removed the report from its website during the FCIC hearings).
FICTION: "These loans performed well," the FCIC report maintained.
FACT: Brookings found that the loan commitments were set aside for low-income minorities with "marginal credit scores" and posed a higher risk. They were even riskier than regular CRA loans, because the banks delegated underwriting authority to the nonprofit shakedown groups, which had no experience judging credit risk.
NACA thinks traditional underwriting standards are "patronizing and racist." It advertises that anyone "regardless of how bad your credit is" can qualify for the mortgages it's arranged through special deals with banks. Not surprisingly, one study found that its delinquency rates were eight times higher than the national average.
Banks reported delinquency rates ranging from 5% to 50% on loans made pursuant to their merger-related commitments.
Yet the FCIC refused to investigate the more than 300 CRA agreements that banks and community organizers entered into before the subprime bubble burst.
Despite repeated requests by Commissioner Peter Wallison, the panel never examined the performance of the trillions in loan commitments.
Why would Chairman Angelides steer blame away from the CRA? Because he's a big fan of the CRA. And as California state treasurer, from 1999 to 2007, he steered billions in state funds into unsafe CRA mortgages securitized by Freddie Mac.
At the time, Greenlining advised Angelides on where to invest California state funds, even providing him with its own CRA report card on "good" and "bad" banks. He has also personally benefited from CRA projects brokered by his real estate development firms, according to "The Great American Bank Robbery."
As part of the CRA racket, Angelides should have been a witness in the crisis investigation, not its chief inquisitor. With the cover-up complete, he now hopes that CRA critics will go away.
"The debate about the role of the CRA should now be over as evidence presented in the commission's report is clear," Angelides declared earlier this month.
Sorry, sir, but the debate will end when the public has all the facts, not just your cooked report.
The CRA certainly did not cause the financial crisis. However, it did contribute to it.
Ironically, the very same people who insisted money be lent to people who could not afford houses are the very same people now bitching about those same "predatory loans".
Forcing banks to lend money is a piss poor idea. Piss poor loans help neither the lender nor the borrower. Yet, those who added fuel to the housing bubble have now whitewashed their role in the affair and beg for still more funds.
President Obama want to expand the CRA. Instead it should be added to the scrap heap of history along with Fannie Mae, Freddie Mac, HUD, HAMP, and thousands of affordable home programs all of which did anything but make homes affordable.
Now that home prices are falling, one might think the affordable home advocates would be happy. They are not. The hypocrites now want to prop up home prices on the belief that falling home prices hurt neighborhoods.
Read more at Mish's Global Economic Trend Analysis: How the CRA Fueled the Housing Bubble
As to CRA, there was no requirement that banks loan money to bad risks. what they couldn't do was discriminate racially.
For the first time, banks were required to show results. One of the five performance criteria in the "lending test" — the most heavily weighted component of the CRA exam — was adopting "flexible lending practices" to address the credit needs of poor borrowers in "predominantly minority neighborhoods." Banks that didn't bend their underwriting rules risked flunking the exam.
Ex-Federal Reserve Board Gov. Lawrence Lindsey, a staunch CRA defender, acknowledges that the changes "did contribute to a downgrading of credit standards."
FICTION: "Many of these (CRA) loans were not very risky," the FCIC report claims.
FACT: Studies show that CRA loans have higher delinquencies and defaults and act as a major drag on bank earnings. In 2008, CRA loans accounted for just 7% of Bank of America's total mortgage lending, but 29% of its losses on home loans. Also, banks with the highest CRA ratings tend to have the lowest safety and soundness ratings.
FICTION: Only 6% of subprime loans were originated by banks subject to the CRA, so the vast majority of risky lending was not tied to the law.
FACT: Among other things, the figure does not count the trillions of dollars in CRA "commitments" that WaMu, BofA, JPMorgan Chase, Citibank, Wells Fargo and other large banks pledged to radical inner-city groups like Acorn, Greenlining and Neighborhood Assistance Corp. of America (NACA) after they used the public comment process to protest bank merger applications on CRA grounds.
All told, they shook down banks for $4.6 trillion in such commitments before the crisis, boasts a report by the National Community Reinvestment Coalition, or NCRC, the nation's top CRA lobbyist (which conveniently removed the report from its website during the FCIC hearings).
FICTION: "These loans performed well," the FCIC report maintained.
FACT: Brookings found that the loan commitments were set aside for low-income minorities with "marginal credit scores" and posed a higher risk. They were even riskier than regular CRA loans, because the banks delegated underwriting authority to the nonprofit shakedown groups, which had no experience judging credit risk.
NACA thinks traditional underwriting standards are "patronizing and racist." It advertises that anyone — "regardless of how bad your credit is" — can qualify for the mortgages it's arranged through special deals with banks. Not surprisingly, one study found that its delinquency rates were eight times higher than the national average.
Banks reported delinquency rates ranging from 5% to 50% on loans made pursuant to their merger-related commitments.
Yet the FCIC refused to investigate the more than 300 CRA agreements that banks and community organizers entered into before the subprime bubble burst.
Despite repeated requests by Commissioner Peter Wallison, the panel never examined the performance of the trillions in loan commitments.
Why would Chairman Angelides steer blame away from the CRA? Because he's a big fan of the CRA. And as California state treasurer, from 1999 to 2007, he steered billions in state funds into unsafe CRA mortgages securitized by Freddie Mac.
At the time, Greenlining advised Angelides on where to invest California state funds, even providing him with its own CRA report card on "good" and "bad" banks. He has also personally benefited from CRA projects brokered by his real estate development firms, according to "The Great American Bank Robbery."
As part of the CRA racket, Angelides should have been a witness in the crisis investigation, not its chief inquisitor. With the cover-up complete, he now hopes that CRA critics will go away.
"The debate about the role of the CRA should now be over as evidence presented in the commission's report is clear," Angelides declared earlier this month.
Sorry, sir, but the debate will end when the public has all the facts, not just your cooked report.
The CRA certainly did not cause the financial crisis. However, it did contribute to it.
Ironically, the very same people who insisted money be lent to people who could not afford houses are the very same people now bitching about those same "predatory loans".
Forcing banks to lend money is a piss poor idea. Piss poor loans help neither the lender nor the borrower. Yet, those who added fuel to the housing bubble have now whitewashed their role in the affair and beg for still more funds.
President Obama want to expand the CRA. Instead it should be added to the scrap heap of history along with Fannie Mae, Freddie Mac, HUD, HAMP, and thousands of affordable home programs all of which did anything but make homes affordable.
Now that home prices are falling, one might think the affordable home advocates would be happy. They are not. The hypocrites now want to prop up home prices on the belief that falling home prices hurt neighborhoods.
Read more at Mish's Global Economic Trend Analysis: How the CRA Fueled the Housing Bubble
why would you think i'd find your rightingnut blogosphere nonsense compelling?
i know what the CRA required. I know what it didn't. i know what the banks did then.
but thanks for wasting the bandwidth.
EdwardBaiamonte
Platinum Member
- Nov 23, 2011
- 34,612
- 2,153
- 1,100
As to CRA, there was no requirement that banks loan money to bad risks. what they couldn't do was discriminate racially.
For the first time, banks were required to show results. One of the five performance criteria in the "lending test" the most heavily weighted component of the CRA exam was adopting "flexible lending practices" to address the credit needs of poor borrowers in "predominantly minority neighborhoods." Banks that didn't bend their underwriting rules risked flunking the exam.
Ex-Federal Reserve Board Gov. Lawrence Lindsey, a staunch CRA defender, acknowledges that the changes "did contribute to a downgrading of credit standards."
FICTION: "Many of these (CRA) loans were not very risky," the FCIC report claims.
FACT: Studies show that CRA loans have higher delinquencies and defaults and act as a major drag on bank earnings. In 2008, CRA loans accounted for just 7% of Bank of America's total mortgage lending, but 29% of its losses on home loans. Also, banks with the highest CRA ratings tend to have the lowest safety and soundness ratings.
FICTION: Only 6% of subprime loans were originated by banks subject to the CRA, so the vast majority of risky lending was not tied to the law.
FACT: Among other things, the figure does not count the trillions of dollars in CRA "commitments" that WaMu, BofA, JPMorgan Chase, Citibank, Wells Fargo and other large banks pledged to radical inner-city groups like Acorn, Greenlining and Neighborhood Assistance Corp. of America (NACA) after they used the public comment process to protest bank merger applications on CRA grounds.
All told, they shook down banks for $4.6 trillion in such commitments before the crisis, boasts a report by the National Community Reinvestment Coalition, or NCRC, the nation's top CRA lobbyist (which conveniently removed the report from its website during the FCIC hearings).
FICTION: "These loans performed well," the FCIC report maintained.
FACT: Brookings found that the loan commitments were set aside for low-income minorities with "marginal credit scores" and posed a higher risk. They were even riskier than regular CRA loans, because the banks delegated underwriting authority to the nonprofit shakedown groups, which had no experience judging credit risk.
NACA thinks traditional underwriting standards are "patronizing and racist." It advertises that anyone "regardless of how bad your credit is" can qualify for the mortgages it's arranged through special deals with banks. Not surprisingly, one study found that its delinquency rates were eight times higher than the national average.
Banks reported delinquency rates ranging from 5% to 50% on loans made pursuant to their merger-related commitments.
Yet the FCIC refused to investigate the more than 300 CRA agreements that banks and community organizers entered into before the subprime bubble burst.
Despite repeated requests by Commissioner Peter Wallison, the panel never examined the performance of the trillions in loan commitments.
Why would Chairman Angelides steer blame away from the CRA? Because he's a big fan of the CRA. And as California state treasurer, from 1999 to 2007, he steered billions in state funds into unsafe CRA mortgages securitized by Freddie Mac.
At the time, Greenlining advised Angelides on where to invest California state funds, even providing him with its own CRA report card on "good" and "bad" banks. He has also personally benefited from CRA projects brokered by his real estate development firms, according to "The Great American Bank Robbery."
As part of the CRA racket, Angelides should have been a witness in the crisis investigation, not its chief inquisitor. With the cover-up complete, he now hopes that CRA critics will go away.
"The debate about the role of the CRA should now be over as evidence presented in the commission's report is clear," Angelides declared earlier this month.
Sorry, sir, but the debate will end when the public has all the facts, not just your cooked report.
The CRA certainly did not cause the financial crisis. However, it did contribute to it.
Ironically, the very same people who insisted money be lent to people who could not afford houses are the very same people now bitching about those same "predatory loans".
Forcing banks to lend money is a piss poor idea. Piss poor loans help neither the lender nor the borrower. Yet, those who added fuel to the housing bubble have now whitewashed their role in the affair and beg for still more funds.
President Obama want to expand the CRA. Instead it should be added to the scrap heap of history along with Fannie Mae, Freddie Mac, HUD, HAMP, and thousands of affordable home programs all of which did anything but make homes affordable.
Now that home prices are falling, one might think the affordable home advocates would be happy. They are not. The hypocrites now want to prop up home prices on the belief that falling home prices hurt neighborhoods.
Read more at Mish's Global Economic Trend Analysis: How the CRA Fueled the Housing Bubble
why would you think i'd find your rightingnut blogosphere nonsense compelling?
i know what the CRA required. I know what it didn't. i know what the banks did then.
but thanks for wasting the bandwidth.
dear, you have to say why it was not compelling or admit as a liberal you lack the IQ to do so. How old are you??
As to CRA, there was no requirement that banks loan money to bad risks. what they couldn't do was discriminate racially.
For the first time, banks were required to show results. ]
why would you think i'd find your rightingnut blogosphere nonsense compelling?
i know what the CRA required. I know what it didn't. i know what the banks did then.
but thanks for wasting the bandwidth.
I dislike blog based evidence as much as anyone, so here's the numbers: I'd happily link to anything you have to refute them
Also, I note that the CRA began with Clinton, but Bush did nothing to slow it down.
The problem was bipartisan: Both dems and Repubs drove the economy before it finally went into the ditch in 2008.
Last edited:
EdwardBaiamonte
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Also, I note that the CRA began with Clinton, but Bush did nothing to slow it down.
why would he given that he was not much of a conservative/libertarian????
The problem was bipartisan: Both dems and Repubs drove the economy before it finally went into the ditch in 2008.
way too stupid!! 100% of the energy for capitalist free markets is Republican/libertarian, while liberals are openly and 100% opposed
CRA was just one of 62 liberal agencies and programs designed to subvert the free market by getting people into homes the Republican free market said they could not afford.
Also, I note that the CRA began with Clinton, but Bush did nothing to slow it down.
why would he given that he was not much of a conservative/libertarian????
The problem was bipartisan: Both dems and Repubs drove the economy before it finally went into the ditch in 2008.
way too stupid!! 100% of the energy for capitalist free markets is Republican/libertarian, while liberals are openly and 100% opposed
CRA was just one of 62 liberal agencies and programs designed to subvert the free market by getting people into homes the Republican free market said they could not afford.
Stupid is claiming anything is 100%.
Clinton started CRA. Bush did little more than whisper complaints about it.
You are a partisan ass (or elephant).
EdwardBaiamonte
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Bush did little more than whisper complaints about it.
who cares what Bush did given that he was not very conservative or libertarian???
Bush did little more than whisper complaints about it.
who cares what Bush did given that he was not very conservative or libertarian???
My guess would be that given that he was REPUBLICAN, then REPUBLICANS would care.
Jaysus do people need to paint pictures for you in every fucking post?
If so, then consider this your last spoon-feeding.
EdwardBaiamonte
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My guess would be that given that he was REPUBLICAN, then REPUBLICANS would care.
dear, he was just a Republican politician, not a Republican philosopher, who knew like all politicians that independents decide elections in America, and he acted accordingly.
Is that really over your head??
- Thread starter
- #277
Abstract:
Two parallel real estate bubbles emerged in the United States between 2004 and 2008, one in residential real estate, the other in commercial real estate. The residential real estate bubble has received a great deal of popular, scholarly, and policy attention. The commercial real estate bubble, in contrast, has largely been ignored.
This Article explores the causes of the commercial real estate bubble. It shows that the commercial real estate price bubble was accompanied by a change in the source of commercial real estate financing. Starting in 1998, securitization became an increasingly significant part of commercial real estate financing. The commercial mortgage securitization market underwent a major shift in 2004, however, as the traditional buyers of subordinated commercial real estate debt were outbid by collateralized debt obligations (CDOs). Savvy, sophisticated, experienced commercial mortgage securitization investors were thus replaced by investors who merely wanted product to securitize. The result was a noticeable decline in underwriting standards in commercial mortgage backed securities that contributed to the commercial real estate price bubble.
The commercial real estate bubble holds important lessons for understanding the residential real estate bubble. Unlike the residential market, there is almost no government involvement in commercial real estate. The existence of the parallel commercial real estate bubble presents a strong challenge to explanations of the residential bubble that focus on government affordable housing policy, the Community Reinvestment Act, and the role of Fannie Mae and Freddie Mac. Instead, the changes in commercial real estate financing closely mirror changes in the residential real estate financing, which shifted from regulated government-sponsored securitization to unregulated private securitization. This indicates that changes in the securitization market contributed to the problems in both the commercial and residential real estate markets.
The Commercial Real Estate Bubble by Adam Levitin, Susan Wachter :: SSRN
- Thread starter
- #278
This research, if anything, pushes against movement conservative CRA arguments. In light of the evidence in question 2, many conservatives argue that regulators used CRA to push down lending standards, which then impacted other firms. But this paper finds that extra loans aren't more likely to have higher interest rates, lower loan-to-value, or be balloon/interest-only/jumbo/buy-down mortgages, although there is a slight increase in undocumented loans. And their borrowers aren't more likely to have risky characteristics themselves. The authors conclude that "this pattern is consistent with banks strategic attempts to convince regulators that the loans they extend that meet CRA criteria are not overtly risky."
Read that again. The authors argue, from their empirical evidence, that regulators were trying to make sure these loans had high standards, and CRA banks tried to comply with that as best they could on the major, visible risks of their loans. This is the opposite argument made by people like John Carney, who believes the CRA "encourag[ed] lenders to adopt loose standards for mortgages." It also pushes against people like Peter Wallison, who, in his FCIC dissent, argued that CRA loans were more likely to have subprime characteristics or riskier borrowers in ways not captured by a higher-price variable. Not the case.
It also finds that loan volume and risk increases the most during 2004-2006, and points to the private securitization market as an important channel. This, along with characteristics above, pushes back against the idea that the CRA primed a subprime pump in the late 1990s and early 2000s, another favorite of movement conservative finance writers. If anything, banks undergoing CRA exams were caught up in the same mechanisms that were causing the housing bubble itself.
What Does the New Community Reinvestment Act (CRA) Paper Tell Us? | Next New Deal
Quantum Windbag
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- May 9, 2010
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The idea that the CRA was a big contributor to the housing debacle keeps popping up. Thus, I'm creating a new thread to refute this assertion.
The San Francisco Fed says that the CRA was not a primary contributor to the housing bubble.
Real Time Economics : Don't Blame CRA (The Sequel)A pair of economists from the Federal Reserve Bank of San Francisco added another piece of evidence to the case that the 1977 Community Reinvestment Act wasnt the cause, or even a major contributor, to the subprime mortgage debacle.
In a paper focused on California that was presented at a Fed conference on housing and mortgages in Washington, D.C., Elizabeth Laderman and Carolina Reid say the data should help to quell if not fully lay to rest the arguments that the CRA caused the current subprime lending boom by requiring banks to lend irresponsibly in low and moderate-income lenders. Fed governor Randall Kroszner made a similar case earlier this week.
Among the specific findings in Lending in Low- and Moderate-Income Neighborhoods in California: The Performance of CRA Lending During the Subprime Meltdown:
# Overall, lending to low and moderate income communities comprised only a small share of toal lending by CRA lenders, even during the height of the California subprime lending boom.
# Loans originated by lenders regulated under CRA in general were significantly less likely to be in foreclosure than those originated by independent mortgage companies that werent covered by CRA.
# Loans made by CRA lenders within their geographic assessment areas covered by the law were half as likely to go into foreclosure as those made by the independent mortgage companies.
# 28% of loans made by CRA lenders in low income areas within their geographic assessment areas were fixed-rate loans, compared with 18.2% of loans made by independent mortgage companies in low income areas.
# 12% of the loans made by CRA lenders in these areas were high-priced loans, a technical definition of subprime, compared with 29% of the loans made by those lenders outside their assessment areas and 52.4% of loans made by independent mortgage companies in low-income areas.
Federal Reserve governor, Randall Kroszner, says the CRA had little effect on home prices.
Real Time Economics : Fed's Kroszner: Don't Blame CRAThe striking result, Kroszner said: Only 6% of all the higher-priced loans were extended by CRA-covered lenders to lower-income borrowers or neighborhoods in their CRA assessment areas, the local geographies that are the primary focus for CRA evaluation purposes.
This result undermines the assertion by critics of the potential for a substantial role for the CRA in the subprime crisis. In other words, the very small share of all higher-priced loan originations that can reasonably be attributed to the CRA makes it hard to imagine how this law could have contributed in any meaningful way to the current subprime crisis. Banks can also meet CRA obligations by buying loans from mortgage brokers, he noted. But less than 2% of the higher-priced loans (those would help banks meet CRA requirements) sold by independent mortgage companies were purchased by CRA-covered institutions.
FDIC Chairwoman, Sheila Bair, and Comptroller of the Currency John Dugan say that the CRA was not a significant factor.
FDICs Bair Sets to Shatter CRA Myth : HousingWire || financial news for the mortgage market
How does a study that claims the CRA is not the primary cause of something prove that it did not contribute to it? Are you suddenly speaking a foreign language where "primary cause" means "only cause"?
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