Mises Institute: The CRA Scam and its Defenders
Mises Institute: The CRA Scam and its Defenders “The myth that the CRA (The federal government’s 1977 Community Reinvestment Act) would not be harmful to bank-industry profits was hidden for years by the Fed-created housing bubble, which allowed for easy refinancing of all the bad debt. But now that the bubble has burst, all those unqualified borrowers — whom the government calls “subprime” — are defaulting. The bursting of the Fed-generated housing bubble is the reason why the CRA scam was not exposed until now.” - So far as I understand, this Act empowered banks to invest in subprime. The article seems to suggest that packaging of debt was a solution to the risk taken on by banks in response to the CRA Act. But, that continual housing booms cycles of house price booms, fed led, let the problem be hidden till now.
Original post by planning4acrash
