Ole Stand-By: GOP Still Blaming CRA for Financial Crisis
Worth noting from yesterday’s House Judicial subcommittee hearing on the foreclosure crisis: Republicans just can’t shake the temptation to blame the Community Reinvestment Act for causing the current economic turmoil.
You’ve heard the critics’ argument before: The CRA hasn’t so much empowered low-income borrowers as it has lowered lending standards, thus forcing banks to make the bad loans that led to the crisis.
Rep. Trent Franks (R-Ariz.), the subpanel’s senior Republican, summed up the sentiment nicely Thursday when he claimed the downturn was caused not by predatory lenders preying on people, but by a predatory government preying on banks for political ends.
Never mind that no less an authority than the Federal Reserve’s director of consumer and community affairs said the CRA was “ Instead, the Fed found that CRA-covered banks were responsible for just 6 percent of the risky, high-cost loans that sparked the financial wildfire.
Franks’ comments weren’t overlooked by Rep. William Delahunt (D-Mass.), who used most of his Q&A time debunking the myth, picking from witnesses statistics like those reported by the Fed. Not that he imagined the Republicans were listening.
“When you’re looking for whipping boys,” Delahunt said, “the CRA is just a prime target.”