Those poor, weak banks paying out almost $200 BILLION in fines because Democrats forced them to loan to people in Harlem, Detroit, Oakland, etc. Too bad they didn't loan to places other than inner-city communities right? lmaorog
These questions show why proximity and statistical validity are so important. Let’s get more specific
.The Community Reinvestment Act of 1977 is a favorite boogeyman for some, despite the numbers that so easily disprove it as a cause. It is a statistical invalid argument, as the data show.
For example, if the CRA was to blame,
the housing boom would have been in CRA regions; it would have made places such as Harlem and South Philly and Compton, Calif., and inner Washington, the primary locales of the run up and collapse. Further, the default rates in these areas should have been worse than other regions.
What occurred was the exact opposite: The suburbs boomed and busted and went into foreclosure in much greater numbers than inner cities.
The tiny suburbs and exurbs of South Florida and California and Las Vegas and Arizona were the big boomtowns, not the low-income regions.
The redlined areas the CRA address missed much of the boom; places that busted had nothing to do with the CRA.
The
market share of financial institutions that were subject to the CRA has steadily declined since the legislation was passed in 1977. As noted by Abromowitz & Min, CRA-regulated institutions, primarily banks and thrifts,
accounted for only 28 percent of all mortgages originated in 2006.
...Private lenders not subject to congressional regulations collapsed lending standards
www.benzinga.com
