Sunday, March 16, 2008
Government at Work - Community Reinvestment Act of 1977
And the damage goes on, and on, and on.
I wonder what the long term consequences of the latest "fix" will be...
I wonder what the long term consequences of the latest "fix" will be...
In the Boston Globe, Jeff Jacoby reports:
"The subprime mortgage collapse is another tale of unintended consequences.
The crisis has its roots in the Community Reinvestment Act of 1977, a Carter-era law that purported to prevent 'redlining' - denying mortgages to black borrowers - by pressuring banks to make home loans in 'low- and moderate-income neighborhoods.' Under the act, banks were to be graded on their attentiveness to the 'credit needs' of 'predominantly minority neighborhoods.' The higher a bank's rating, the more likely that regulators would say yes when the bank sought to open a new branch or undertake a merger or acquisition."
