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.