Repeal CRA – The Community Reinvestment Act
In practice, CRA functions as the Congressional Reparations Act.
It became law in 1977, and its purpose was to use our banking system as a credit source for making sub-prime loans to high risk borrowers; in effect, it’s our credit markets version of Affirmative Action.
CRA legislated sub-prime lending by socializing loan risks and privatizing loan losses.
CRA established a double standard for assessing and meeting credit demand: (1) Traditional standards based on quality and (2) new, CRA standards that reward banks for making sub-prime loans to high risk borrowers.
Congress even directed Fannie-Mae and Freddie-Mac to follow CRA’s lending criteria and grow that segment of their portfolio.
Repeal CRA now.
It was flawed at conception and is the Mother of our current economic crisis.