The CRA-Caused-this-Bubble Lie

Rightwing bobbleheads have been using the Community Reinvestment Act (CRA) as a scapegoat for the current financial crisis. Their thesis: by outlawing banks to "red zone" against a minority community, the government forced banks to make risky subprime loans that ultimately brought on this housing bubble

It is a great thesis for rightwingers in that it conveniently blames the government and minorities- two thing they have no great love of.

It is also patently dishonest and wrong.

Daniel Gross has a pretty good takedown of this at Slate. But the basic fact is this: The CRA only applied to banks. During the subprime boom, much of the the subprime loans were not made by banks at all, but by mortgage brokers. There is no way these mortgage brokers were affected by CRA at all.

Rightwing pundits, either through ignorance or dishonesty, have been peddling this lie in a coordinated fashion this past 2 weeks. It is important to have the facts straight.