Actually, the banks WERE forced to reduce their credit policies in order to make loans to minorities.
In fact, Barack Obama was one of the lawyers in a landmark 1994 case vs. Citibank.
http://www.suntimes.com/news/politics/obama/700499,CST-NWS-Obama-law17.article
In addition, the Clinton administration pressured the banks to make such loans. Basically, the banks were forced to make the loans, and were then assured that Fannie and Freddie would guarantee the loans. So they made them like nuts after that.
Too bad people didn’t realize who really caused this meltdown due to media propaganda/disinformation.
We might disagree with that lawsuit and the CRA itself, but that doesn’t mean the CRA led to the subprime mortgage crisis. Listen, I always check the other side of a debate. Usually, the Dems do not make a valid argument.
But, in the case of the CRA, they do bring forth a valid point: the CRA doesn’t regulate most of those mortgage companies that sold subprime mortgages. And they’re correct on that point: http://www.federalreserve.gov/dcca/cra/
It regulates only depository institutions, and it requires the borrowers to be creditworthy.
Here’s more about it:
http://www.ocregister.com/articles/loans-subprime-banks-2228728-law-lenders
What really gets my beef are the home ownership subsidy programs. (The gov’t subsidizes mortgages for some low-income families.) The CRA is overreaching, but I’d rather have the CRA than the subsidy programs. JMHO. Better yet, let’s throw them all out.
Btw, my husband and I bought our home with an ARM. An ARM can be a useful tool. Once the rates dropped, we locked into a fixed-rate mortgage under a lower rate. The key is, we didn’t overpay for our home. Later, too many people overpaid for their overvalued homes and then borrowed even more against those inflated values.