Investment banks in retail lending had nothing to do with why the subprime debacle occurred.
The CRA applied to all banks insured by the FDIC which for example Countrywide Credit, the single biggest offender was.
“Investment banks in retail lending had nothing to do with why the subprime debacle occurred.”
That’s not at all accurate. IBs provided the warehouse lines of credit to the thousands of independent mortgage brokers that were cranking out subprime loans. The subprimes were the raw material for the CDO industry. Yves Smith has detailed how the derivatives industry was driving the creation of subprime loans in her chapter on Magnetar Capital.
“The CRA applied to all banks insured by the FDIC which for example Countrywide Credit, the single biggest offender was.”
Countrywide was one of the largest non-depository mortgage lenders from 1969 to 2001, when it acquired a small Virgina bank. When it was acquired by BofA in 2008 it had banking outlets in Virginia and Texas. I can’t find any evidence that they had deposit taking operations in other states before BofA acquired them.
http://www.occ.gov/static/interpretations-and-precedents/may09/ca900.pdf