Congress Should Expand the Community Reinvestment Act

Alissa — Tue, 30 Sep 2008 13:42:03 -0700

Posted on September 30, 2008

Congress thinks it's about to "solve" the nation's deepening financial crisis with a $700 billion bailout of Wall Street. What's being overlooked is that one of the fundamental causes is the erosion of place-based investing. And a fundamental solution has to be an expansion of the Community Reinvestment Act (CRA).

There's no shortage of villains here. Mortgage companies pushed predatory adjustable-rate loans on the gullible poor. Regulators loosened standards in the name of the free market. Finance companies created exotic securities and derivatives that effectively hid risk. And many of these players fraudulently misrepresented or withheld critical pieces of information. Yet, at its core, this entire mess is about the delinking of investment from place. — read more