It Ain't the CRA, Folks; It's De-Regulation

Ritholtz doubles down on his point: it was NOT the CRA which made the mortgage market implode. Personally, I think that CRA was a contributor, but Ritholtz clearly makes the case that it was not "THE cause."

Some facts which should be considered by Phil Gramm and his mind-darkened followers:

The 345 mortgage brokers that imploded were non-banks, not covered by the CRA legislation. The vast majority of CRA covered banks are actually healthy.

The biggest foreclosure areas aren’t Harlem or Chicago’s South side or DC slums or inner city Philly; Rather, it has been non-CRA regions — the Sand States — such as southern California, Las Vegas, Arizona, and South Florida. The closest thing to an inner city foreclosure story is Detroit – and maybe the bankruptcy of GM and Chrysler actually had something to do with that.

When CRA was introduced, the FDIC (and other bank regulators) made a big deal of it, and a number of Milwaukee-area banks paid attention. But the lending resulting from CRA was not the "disaster" which was predicted at the time. Gramm is way overblowing his case to draw attention from his successful deregulation, which was successful only in creating 'too big to fail' Zombies such as Citibank.

Need more on the ills of deregulation? OK. Paul Volcker thinks that the system needs MORE regulation. Remember Paul? The guy who fixed the system post-Carter? Yah, him.

Shut up, Phil.