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Consumer advocates say recent data shows that banks must do more in disadvantaged areas in cities such as New York. A closer look, however, shows improvement in certain CRA-related areas.
November 30 -
The sad reality is that an unregulated shadow financial system pushed explosive subprime loans.
August 23 -
The effects of a loose monetary policy were compounded by housing policy not just the "affordable" housing goals set for Fannie and Freddie but also CRA quotas imposed on banks.
August 22
Here we go again. Over the holidays, another group issued a report seeking to discredit the Community Reinvestment Act, passed in 1977 to encourage regulated financial institutions to meet the credit needs of their communities in a safe and sound manner.
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The paper would not be worth a mention except for the danger that its content could be used to support misguided policy and practice as we emerge from the foreclosure crisis. Indeed, the American Enterprise Institute quickly
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As a former banker and former bank regulator, we were struck by the authors' complete misconception of how CRA actually works. In particular, the paper's entire thesis is built on the premise that lending three quarters just before and after a CRA “exam date” is relevant to the bank's CRA rating. As we know from experience, lending in those quarters is almost certain to be too late to have any impact.
Multiple studies have shown that CRA did not drive the risky lending that led to the subprime crisis. Studies by researchers at the
As we begin a new year and continue the important work of rebuilding a strong, safe and sustainable housing market and economy, let's leave behind this tired debate and affirm what we know to be true: the Community Reinvestment Act has played an important role in sustainably expanding home lending to many Americans and communities.
It doesn't take extensive research or a degree in economics to understand that expanding home lending that is safe for both borrowers and lenders promotes a vibrant housing market, strong neighborhoods and a stronger economy. So let's move on, shall we?