The GOP and the big money wall street types are rolling out a racist attack to deflect blame for the economic meltdown to minority communities and Clinton/Carter.
They are saying that the cause of the Subprime crisis was the CRA and lending to minorities to buy homes.
This is gaining traction and is dangerous and a total lie. (not that they care about the truth) If you hear this lie you need to push back and push back hard.
This is one of the MOST disheartening attacks and slanders in this campaign. And it is also meant to highlight race in the election AGAIN.
Here are the facts.
Information we have on the CRA. We have heard the conservative talkers try and use this, but, as they say, the truth is far more interesting. Use this to push back--
CRA caused the current financial crisis? Hardly:
CRA does not require banks or thrifts to make loans that are unsafe or unprofitable. In fact, the law stipulates that CRA lending activities must be done consistent with safe and sound banking practices. In fact, most high-cost loans were originated by lenders that did NOT have a CRA obligation and lacked federal regulatory oversight.
According to an analysis of HMDA data in the 15 most populous U.S. metropolitan areas, non-CRA lenders made a disproportionate number of high-cost loans. In 2006, 84.3% of high-cost loans were originated by non-CRA covered entities (overall, non-CRA covered entities originated 69.6% of all mortgages) and nearly 83% of high-cost loans to low- and moderate-income individuals were originated by non-CRA covered entities (overall, non-CRA covered entities originated 67.5% of all loans to LMI individuals).
In 2006, only one of the top 25 subprime lenders was an insured depository institution with a CRA obligation. Although a few others were mortgage/finance company affiliates of CRA covered lenders, these entities do not have a CRA obligation (i.e. Countrywide, CitiMortgage, Wells Fargo Home Mortgage). Similarly, the vast majority of the top 20 producers of risky interest-only and option ARM loans were not CRA covered lenders.
CRA covered institutions, for the most part, did not engage in lending practices that fueled the foreclosure epidemic and subsequent economic crisis.
Background on the Community Reinvestment Act:
The Community Reinvestment Act of 1977 (CRA) encourages federally insured banks and thrifts to meet the credit needs of the entire communities they serve, including low- and moderate-income areas, consistent with safe and sound banking practices. The law was enacted in response to concerns about disinvestment and evidence that some lenders were systematically denying credit to certain communities, particularly lower-income and minority neighborhoods, under a practice known as “redlining.”
The benefits of CRA have been substantial: CRA has been credited with increasing home ownership, decent affordable rental housing, small business ownership, community development investments; and critically needed affordable financial services and products (such as remittances, low-cost banks accounts, and bank branches) in distressed communities across the nation.
In March 2007, Federal Board Chairman Bernanke noted that CRA has helped institutions discover and enter new markets that may have been previously under-served and ignored by insured depositories.
This is disgusting, and it is gaining ground. One youtube video explaining the CRA as the cause of the crisis, has had over 700,000 views in 2 days. Ideas on what we can do to stop this?
