The Classic Liberal Blog

[...] Powered by Jimmy Carter’s 1977 Community Reinvestment Act (CRA) ‘community groups like the now deceased and fully discredited ACORN worked for years pushing banks to make loans available to low income families. Using its ties to the government and the Federal Reserve they forced banks do loans they otherwise wouldn’t have. The Federal Reserve Board has been ACORN’s “partner” in this endeavor ever since 1977, when the Fed was given responsibility (along with the Comptroller of the Currency) for enforcing the CRA. For those who are not yet familiar with the CRA, which was significantly strengthened during the Clinton administration, it works like this: The ostensible purpose of the Act is to get banks to make more mortgage loans in “minority and low-income” neighborhoods. These loans have been defined by the government as “sub-prime” loans, implying that the borrowers have credit ratings just a tiny, tiny smidgen below the “prime” or highest-credit-rating borrowers. This of course is a farce, as nearly everyone now knows. The Fed keeps track of such loans, and gives each lender a CRA ranking. A poor ranking can destroy a bank’s plans for branch expansions, mergers, and other activities. The Federal Reserve ACORN Racket [...]