Did Too Much Banking Regulation Cause the Banking Crisis?

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"Did Too Much Banking Regulation Cause the Banking Crisis?"

That’s what some conservatives have begun to argue. They point at the Community Reinvestment Act, the landmark law requiring banks to serve low-income communities. But this is a silly idea. The law has been around for 30 years, but the crisis emerged in just the last few. In this period, activity under the law has been limited, and the Bush Administration has actually made the law weaker. What’s more, the biggest drivers of the subprime crisis are independent mortgage lenders that aren’t covered by the law at all. The cause of this crisis isn’t too much regulation; it’s too little. CAP fellow Robert Gordon explains more here.

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