
Originally Posted by
Phineas Finn
It saddens me that so many people still cling to the myth that the Community Reinvestment Act (CRA) caused the housing bubble and the subsequent market crash.
The CRA only dealt with the problem of discrimination in mortgages -- entire communities had been "Redlined" for reason that most of us believed were discriminatory.
The CRA did not create the junk bond market; it did not force rating organizations to describe risky investments as good investments; it did not force banks to push mortgage applications to approval just to beat their competitors; and it certainly did not force middle- and upper-income Americans to buy much too much house based on the belief that they'd make money in the long-run.
The CRA has become the extreme Right's favorite "bete noir," pun intended, in any discussion of the 2008 market crash. It's time people let it go and embraced the truth.