5. The Community Reinvestment Act’s Responsibility for the Financial Crisis
Experts will likely be debating the constellation of factors that led to last year’s financial downturn for years to come, but many conservatives arrived at the answer early. In late 2008 and early 2009, pundits and politicians on the right were quick to single out the Community Reinvestment Act (CRA) — a Carter-era law aimed at preventing discriminatory housing practices — as the chief cause of the housing collapse and, by extension, the financial crisis. Fox anchor Neil Cavuto put it most baldly, asserting, “Loaning to minorities and risky folks is a disaster.” The claim reverberated through the conservative echo chamber, and was picked up by elected officials like Rep. Jeb Hensarling (R-Texas), who said of the CRA in March, “I know the intent was noble, but the effect has been devastating.” By the time Ben Bernanke and other members of the Federal Reserve began pushing back with facts, it had already become conventional wisdom in many quarters that it was not Wall Street greed or years of lax oversight that had caused the financial crisis, but a bullying gang of anti-poverty activists and irresponsible homeowners of color.