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The Community Reinvestment Act (CRA) Did Not Cause The Mortgage Crisis

The Republican party is just trying out the latest version of the Southern Strategy.

First of all, even if Fannie and Freddie were the most awful companies in the history of the planet, its books chock-a-block with non-performing loans, none of the financial contagion—none of it—would have happened had not greedy financial institutions invented the risky securities that used mortgages as their foundation, via procedures that created economic incentives to write non-performing loans. We explained that a long time ago, here. Second of all, as we explained yesterday, loans that fulfilled the anti-redlining Community Reinvestment Act, performed better than the average mortgage.

Third of all: the part that makes you sick to your stomach. The pattern being drawn across the right—the Big Lie so notorious it's hard to belief they'd even dare it—is that this financial mess is something black people have done to white people.

The difference this time is that this blood libel is being debunked by liberals who aren't spineless. Wall street made this mess with an assist from their conservative pals, and yet again Democrats are needed to clean up a Republican's economic mess.