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Elizabeth Duke Defends the CRA

By Anonymous

Fed Governor Elizabeth Duke gave a speech on the Community Reinvestment Act (CRA) today, and had some harsh words for the crazy right-wingers who claim that the CRA caused the subprime crisis:

The most recent misperception promulgated by many who either do not know much about the law or don't like it, is that the CRA caused the subprime mortgage meltdown.

That makes two conservative Fed Governors (Duke and Randall Kroszner, both of whom were appointed by Bush) who have recently offered vigorous defenses of the CRA, and have flatly rejected the argument that the CRA had anything to do with the subprime crisis. And their analyses were based on two comprehensive Fed studies of the CRA, which definitely disproved the CRA-subprime argument [1], [2]. (In fact, the Fed studies showed that the CRA often improved lending standards.)

Conservative idiots like Phil Gramm, Peter Wallison, and Steve Sailer, however, are still pushing the argument that the CRA caused the subprime crisis, which their wingnut followers will no doubt continue to eat up. It's sad, really, because when we eventually get around to reforming financial regulations, the Republicans will argue?citing the likes of Gramm and Wallison?that we need to repeal the CRA, not reform financial regulations.

Full post as published by Economics of Contempt on February 24, 2009 (boomark / email).