Community Reinvestment Act

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The Community Reinvestment Act ( CRA for short ) is a federal law in the USA that has been intended to avoid so-called redlining , i.e. the restriction of loan offers to affluent residential areas or classes, since the 1970s . The CRA was passed in 1977 under President Jimmy Carter and has been amended several times since then.

In particular, the changes under President George HW Bush , Bill Clinton and George W. Bush were discussed in the USA in the context of the financial crisis in 2007 , since banks were encouraged to grant loans to bad debtors. Economists like Paul Krugman disagreed with this. According to Professor Michael S. Barr, only a quarter of subprime mortgages came from financial institutions that were fully subject to the CRA. The worst excesses occurred among the financial institutions that were least supervised. According to a study by Traiger & Hinckley LLP, financial institutions subject to the CRA made fewer subprime loans than non-CRA competitors. Similar comments came from economists at the US Federal Reserve and the Federal Deposit Insurance Corporation .

In February 2008 hearings in the US House of Representatives , it was found that only a fraction of the subprime mortgages issued in the United States were CRAs, the majority of which were independently issued. The loans granted under CRA also had a lower default rate than the freely granted. There was no causal link between the US government's home ownership program and the financial crisis. Luci Ellis from the Bank for International Settlements (BIS) also comes in her study The housing meltdown: Why did it happen in the United States? concluded that the CRA was not the cause of the financial crisis.

Individual evidence

  1. ↑ Russ Roberts, "How Government Stoked the Mania" , Wall Street Journal , October 3rd of 2008.
  2. ↑ Paul Krugman: Armey of Ignorance . In: NY Times , November 10, 2009. Retrieved February 17, 2010. 
  3. ↑ Michael S. Barr: Prepared Testimony (PDF) In: Hearing on The Community Reinvestment Act: Thirty Years of Accomplishments, but Challenges Remain . United States House Committee on Financial Services . February 13, 2008. Archived from the original on February 3, 2011. Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. Retrieved September 20, 2013. @1@ 2Template: Webachiv / IABot / financialservices.house.gov
  4. ^ Traiger & Hinckley LLP. (2008). The Community Reinvestment Act: A Welcome Anomaly in the Foreclosure Crisis (PDF; 244 kB).
  5. ↑ Federal Reserve website: Speech by Fed Governor Randall S. Kroszner at the Confronting Concentrated Poverty Policy Forum, Board of Governors of the Federal Reserve System, Washington, DC December 3, 2008: The Community Reinvestment Act and the Recent Mortgage Crisis
  6. ↑ Comments by FDIC Chair Sheila Bair at The New America Foundation Conference: “Did Low-income Homeownership Go Too Far?” Washington, DC, December 17, 2008
  7. ^ The housing meltdown: Why did it happen in the United States?