October 12, 2008


IMPEACH BUSH


IMPEACH CHENEY


RIGHT-WING NONSENSE ON THE HOUSING CRISIS


Right-wingers are really reaching in their efforts to blame the current economic crisis on Democrats. It's not due to the free market predatory capitalism they love, they say, but goes back to the Community Reinvestment Act passed in 1977. The CRA was intended to make loans more available to people in poor and minority neighborhoods. Banks practiced something called "redlining." They were literally drawing red lines on maps of certain areas mostly comprised of minorities and refusing to lend there. The CRA was meant to address that. This editorial is from The Boston Globe at www.boston.com:


And yet the Community Reinvestment Act has nothing whatsoever to do with the subprime mess.


The law applies specifically to commercial banks, which in recent months have been the least volatile part of the financial-services industry. The measure was passed in 1977 to combat redlining, the practice of banks refusing to write mortgages in poor neighborhoods - even when they were taking deposits from residents of those neighborhoods.


To meet Community Reinvestment Act requirements, banks do make loans to low-income homebuyers - often in concert with community groups that provide financial advice and other crucial training. While banks at first had to be "dragged into participating," said Tom Callahan, executive director of the Massachusetts Affordable Housing Alliance, loans made under the auspices of the reinvestment law have performed remarkably well. One key initiative of this sort, the state's SoftSecond mortgage program, has a delinquency rate of 1.8 percent - compared with about 5 percent for all mortgages in Massachusetts.