CRA Again

This Robert Gordon article from April pretty much demolishes the notion that the Community Reinvestment Act is responsible for the current crisis. Key points:

  • First, as I said earlier, the timing is all wrong.
  • Second, only a quarter of subprime loans came from institutions to which CRA was fully applicable; half came from institutions that are exempt from CRA requirements.
  • Last, non-CRA institutions were making these loans at twice the rate of institutions covered by the CRA.

Long story short, there’s no relationship here.