tag:blogger.com,1999:blog-22020163.post8517198038707401655..comments2023-10-24T07:28:50.297-04:00Comments on Thinking on the Margin: Stubborn IgnoranceBrian Hollarhttp://www.blogger.com/profile/09365101283657395331noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-22020163.post-1999250109517967582008-09-24T20:17:00.000-04:002008-09-24T20:17:00.000-04:00What a load of crock to blame any part of this on ...What a load of crock to blame any part of this on the CRA.<BR/><BR/>First, there's the timing. CRA came in 1977. The crisis came in 2007. Indeed, by 2004, the Bush administration had weakened the CRA -- and after that (though not, presumably, because of it), bubble lending really took off. <BR/><BR/>Further, CRA only governs a certain class of federally insured banks. Problem is, half of the subprime loans came from mortgage companies with no CRA involvement at all. Another 25%-30% came from companies with very little CRA exposure. For those who left their abacus at home, that's 80% of the loans which were fully or largely outside CRA jurisdiction. <BR/><BR/>The most dangerous lending was made precisely by those entities not subject to the CRA. Janet Yellen, president of the San Francisco Federal Reserve, notes that independent mortgage companies made subprime loans at twice the rate of banks and thrifts. In fact, Yellen notes that CRA has been a force of moderation at the same time as increasing responsible lending to low- and moderate-income households.<BR/><BR/>The CRA is a nice convenient scapegoat for those who want to keep living, Goundhog Day style, in 1981– getting to attack government regulation and social policy that benefits minorities at the same time. Except that the argument is simply wrong. This is 2008. The villain here is the unfettered free market.thinkinghttps://www.blogger.com/profile/06024721812573340354noreply@blogger.com