CRA May Not Have Been the Problem

From Janet Yellen's opening remarks to the 2008 National Interagency, March 31, 2008, she writes -

Before I turn to potential interventions, I want to make one final point. There has been a tendency to conflate the current problems in the subprime market with CRA-motivated lending, or with lending to low-income families in general. I believe it is very important to make a distinction between the two. Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans, and studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households. We should not view the current foreclosure trends as justification to abandon the goal of expanding access to credit among low-income households, since access to credit, and the subsequent ability to buy a home, remains one of the most important mechanisms we have to help low-income families build wealth over the long term.

In other words, most the CRA loans are not sub-prime, and most of the sub-prime loans are not CRA, which means that at worst, the racialist issues are complicating the analysis of the problems since CRA focuses our attention on Blacks and minorities and leads us to blame them for this potentially. You can see this explicitly in Steve Sailer's post, calling it a "diversity recession". I mentioned to one of my colleagues that many a dissertation began this week on CRA's role in all of this, which I think is one of the good things to have come out of it.