And before you accuse me of any sort of partisanship, that’s Thomas DiLorenzo writing on LewRockwell.com, a decidely non-GOP friendly website.
While SK might attempt to argue that CRA’s intent was to use proper lending guidelines and standards, the exact opposite happened (on a government program! Imagine that!).
Further, I would make a point of checking your math regarding “minority” defaults, especially in lower-middle and lower class neighborhoods. Your take doesn’t square with the facts.[/quote]
First, I don’t think identifying Lee Rockwell as non-GOP friendly really increases his credibility. He’s opposed to most all government, and even moreso government regulations.
Secondly, his claims about the CRE being responsible for the subprime collapse is not borne out by the evidence. Here’s the thing. The CRE only applies to depository lenders. Not non-bank lenders like Countrywide and New Century. In 2006, the biggest year for subprime lending, only 2 or 3 of the largest subprime lenders were depository banks (Wamu and Fremont come to mind, there may have been a 3rd.) Most banks shied away from the subprime market. That market was dominated by non-depository lenders.
While there probably was some loosening of lending standards when the CRE was passed, it was over 20 years later that the securitization of the mortgage market became the rule rather than the exception. The loosening of lending standards was a direct results of lenders not retaining exposure, selling off substantially all of the risk to the mortgage backed securities market.
I think identifying the CRA as the cause of the collapse of that market says a lot more about those making the claim than the market itself. The claim is simply not supported by the evidence.
