CRA loans did not create meltdown

A Thursday letter blaming the economic crisis on the Community Reinvestment Act (which increased loans to minorities, among others) is a good example of a right-wing talking point, spread by talk radio and blogs. What’s typical is that it happens to be wrong.

Data show that the loans granted under the CRA were more likely to be repaid than average, and more likely to be retained by the originating bank. It’s the re-selling of bad loans, and bundling them into “mortgage-backed securities” (whatever the heck those are!), which were sold and resold around the world that underlies a big part of the domino effect on credit.

It’s nice to blame everything on liberals, even better to blame it on minorities. Like most of the stuff circulating from the right, it just happens to be wrong.

Sid Schwab

Everett