Just happened to read this today. While it doesn't address the CRA issue and sub-prime mess by name, as usual, Thomas Sowell capsulizes things in a few well chosen words. He pretty much says it all:
Lured To Disaster
http://www.freerepublic.com/focus/f-news/2167865/posts
Read the WaMu lawsuit. It does not involve CRA type loans. WaMu wanted to become a nationwide bank, and they intended to build up their asset value by originating as much loans possible. They abandoned the debt ratios and verification process for conventional loans. Borrowers were encourage to inflate their income and asset entries while the originator looked the other way knowing no one in the bank will review the data. Loans were made to average Joes who did not qualify for it. These types of loans were bundled into portfolios and sold to investors as solid loans. Finally on the CRA issue, no industry will lose money by making loans to people without a fight. Look at the tobacco industry when they fought tooth and nail against lawsuits. The banks rolled over on the CRA mandates because they thought they can take advantage of the government stupidity to give loans to people who were not qualify. Banks simply approved the loan and sold the mortgage within six months. Investors brought into it because it was backed by real estate properties that will not drop in price. They did not care because if a default occurs they can always take the valuable property. People forget that home prices can drop. The real estate bubble popped, the CRA loans and the fraudulant conventional loans came back to haunt the bank, and leveraged investors.