Greenlining CRA Myths & Facts

In recent months, right-wing conservatives have been blaming a lot of things, besides themselves, for the subprime mortgage debacle. And many of these same individuals have long wanted to abolish the Community Reinvestment Act, a landmark law that helped to rebuild some of the nations most desolate communities by requiring banks to lend, invest and open branches in low-income areas that had historically been written off.
These two goals have converged in a new attempt to blame the law for the financial crisis. Recent conversations pointing to the Community Reinvestment Act as the cause of the foreclosure crisis and credit market crisis are an attempt to deflect attention away from the real problem affecting our financial system. That problem is failed regulatory policy and oversight.

Category:

Nonprofits & Activism

Tags:

• community
• reinvestment
• act
• predatory
• lending
• subprime
• mortgages
• foreclosure
• crisis
• CRA
• credit
• market
• Greenlining
• redlining
• regulatory
• policy
• oversight
• practices
• low
• income
• communities
• of
• color
• brokers
• lenders
• appraisers
• rating
• agencies
• independent
• mortgage
• companies
• non-bank
• financial
• institutions
• golden
• parachutes

[benfmo]

85% of Sub Prime loans went to none CRA banks.

Greed and no supervision of loans by the gov local and national...

[jjrglobal]

Fact : the CRA along with the GSE's Fannie and Freddie and the Federal Reserves manipulation of interest rates caused the financial crisis. Government is totally responsible for all this shit. Anyone that thinks otherwise is an uninformed moron.

[DrCruel]

@jjrglobal That's a bit harsh. But it does stretch credibility, to claim that forcing banks to make loans to poor families, in the name of "racial equality", won't lead to problems down the road as many of these families default on their loans. Claiming that higher interest rates to high risk debtors is "predatory" does demonstrate a lack of understanding about how the loan industry works.

[groberts1776]

@elkellenhabla

Grahm - Leach - Bliley is also known as the Financial Services Modernization Act of 1999. See the "Remaining Restrictions" section of the Wiki on the bill for info on how the CRA was strengthened by the FSMA. Clinton enforced the CRA strongly, Bush warned bankers to take safety and soundness into account.

The strongest defender of the CRA has been the law firm Traiger and Hinckley which largely depends on CRA-generated business. They won't "bite the hand that feeds..."

[elkellenhabla]

@groberts1776 what's the bill name/number?

[groberts1776]

They forgot to tell you that the CRA was strengthened by Grahm, Leach, Bliley which was passed in 1999, just before the subprime market took off.

[TomOBrien58]

Where are the sources for these assertions? Please see "Subpime Lending and the Community Reinvestment Act", Kevin Park, Nov 2008, Joint Center for Housing Studies, Harvard University. Park examines the evidence. In the US historically when the government has tried to force people to do things -- think of the draft during the Vietnam War -- some people always say "No." So where are the bankers who said "No" and went to jail or lost their jobs? Where is the evidence?

[badfickle]

You are entitled to your own opinions. Not your own facts. You are simply misinformed. Not all banks are subject to CRA regulations. Only those who chose to use FDIC insurance. My bank for instance uses private insurance and is in no way regulated by the CRA. Private mortgage lenders are not subject to any regulation at all.