The Community Reinvestment Act was a Congressional action taken to force banks to invest in communities so that citizens of lesser means would have access to loans and mortgages. That's a great and noble goal. The problem from the beginning was the operative word, "FORCE".
The Federal Government was NOT ASKING Banks to lend to poor people, the Federal Government was FORCING Banks to lend to poor people. The goal was home ownership for minorities and other "disadvantaged people".
We will NOT get into the entire history of the "CRA". Please click the following link for some more background:
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
You will see that it all began in 1977 and is very complicated. But the single most striking "requirement" of this long and winding piece of legislation is as follows:
In October 2000, in order to expand the secondary market for affordable community-based mortgages and to increase liquidity for CRA-eligible loans, Fannie Mae committed to purchase and securitize $2 billion of so-called "MyCommunityMortgage" loans.
In November 2000 Fannie Mae announced that the Department of Housing and Urban Development (“HUD”) would soon require it to dedicate 50% of its business to low- and moderate-income families." It stated that since 1997 Fannie Mae had done nearly $7 billion in CRA business with depository institutions, but its goal was $20 billion. In 2001 Fannie Mae announced that it had acquired $10 billion in specially-targeted Community Reinvestment Act (CRA) loans more than one and a half years ahead of schedule, and announced its goal to finance over $500 billion in CRA business by 2010, about one third of loans anticipated to be financed by Fannie Mae during that period.
Again... The Federal Government is FORCING Fannie Mae to give 50% of its business to "low and moderate income families". The result has been catastrophic. These people could not pay for their loans and the system has collapsed.
BTW... George Bush and the big bad "capitalists" did not take office until January 2001.
The Feds Have Fixed
the
Problem Right?
Wrong!!!
In light of all this, do you think Capital Hill has changed this legislation? NO ! ! ! !
Legislation that caused the financial meltdown and has brought the world into recession has NOT BEEN REPEALED or suspended or altered.
Fannie Mae STILL has to give loans to people who can't pay them back!
What is Wrong With America?
Repeal CRA! Repeal it Now!
Call your representatives and ask them to represent YOU. Tell them to repeal toxic portions of the CRA.