24/7 Newsfeed

Put Reason 24/7 on Your Site

RSS

Follow Reason 24/7 on Twitter and via RSS

Study: Community Reinvestment Act Promoted Risky Lending

Democrats and the media insist the Community Reinvestment Act, the anti-redlining law beefed up by President Clinton, had nothing to do with the subprime mortgage crisis and recession.

But a new study by the respected National Bureau of Economic Research finds, "Yes, it did. We find that adherence to that act led to riskier lending by banks."

Added NBER: "There is a clear pattern of increased defaults for loans made by these banks in quarters around the (CRA) exam. Moreover, the effects are larger for loans made within CRA tracts," or predominantly low-income and minority areas.

Source: Investors Business Daily. Read full article. (link)

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Audrey||

    I do not think that taking out a loan from bank is a good idea today. Maybe it was where bank loans were the only options available. But today there are lots of alternative lenders who take care of their consumers and ready to offer them better conditions. For example, if you have problems with paying off mortgage ask to provide you some assistance then banks say no, they want you to pay off your mortgage or send you a foreclosure notice. Now we try to lower a foreclosure rate, that’s why alternative lenders offer refinancing and loan modifications to help homeowners to stay in their houses.
    Audrey from http://paydayloansat.com/

advertisement