CRA
I've been hearing a lot of talk from my friends heard Ron Paul blame the current mortgage crisis on the CRA (Community Reinvestment Act) by "forcing banks to lend to people who normally would be rejected as bad credit risks."
While there are many things Ron Paul hits on the head, in this case, its just an example of his extreme dislike of any regulations and he scores off mark. The right-wing pundits have taken this and run with it as an excuse to attack liberals.
There is little evidence to support this. This article gives an excellent summary of the CRA and it's history.
http://www.prospect.org/cs/articles?article=did_liberals_cause_the_subprime_crisis
FTA
In late 2004, the Bush administration announced plans to sharply weaken CRA regulations, pulling small and mid-sized banks out from under the law's toughest standards. Yet sub-prime lending continued, and even intensified -- at the very time when activity under CRA had slowed and the law had weakened.
While there are many things Ron Paul hits on the head, in this case, its just an example of his extreme dislike of any regulations and he scores off mark. The right-wing pundits have taken this and run with it as an excuse to attack liberals.
There is little evidence to support this. This article gives an excellent summary of the CRA and it's history.
http://www.prospect.org/cs/articles?article=did_liberals_cause_the_subprime_crisis
FTA
In late 2004, the Bush administration announced plans to sharply weaken CRA regulations, pulling small and mid-sized banks out from under the law's toughest standards. Yet sub-prime lending continued, and even intensified -- at the very time when activity under CRA had slowed and the law had weakened.