Community Reinvestment Act helped cause US economic meltdown
Monday, September 22, 2008 at 12:15PM The US Congress is squabbling about how to deal with the economic mess and both parties have pointed the blame finger at each other. Truth is, we’re all to blame in a sense because we the people did nothing, and our Congress did nothing even when it could. So much for the “change” Rep. Nancy Pelosi (D-Calif.) promised almost two years ago when her party assumed control of Congress. No one’s mentioned the Community Reinvestment Act passed in 1977 under a Democratic Congress led by a Democratic president.
This act required depository institutions to “meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound banking operations.” Each institution’s record would be “taken into account in considering an institution's application for deposit facilities, including mergers and acquisitions.” Those quotes are from the Federal Financial Institutions Examination Council. Even as Congress takes up the current economic problem, we taxpayers do not have enough information about the causes or the solutions. I still want to know why a government sponsored entity promoted mortgages for a specific faith.
