Minnesota Independent: Against all reason, Bachmann and others blame 1977 fair-lending law for adding to economic crisis

Minnesota Independent (9/24/08)

Against all reason, Bachmann and others blame 1977 fair-lending law for adding to economic crisis

Everyone with a soapbox has spent the better part of this week pointing fingers at who is to blame for the emerging economic crisis stemming from the default of millions of subprime mortgages. One direction that conservatives, Republicans and bankers are pointing their fingers is at the Community Reinvestment Act of 1977 (CRA) — a law created to counter the discriminatory practice mortgage banks used for decades to single out minority neighborhoods for subprime mortgages or otherwise deny credit-worthy individuals access to capital simply because of the color of their skin and their neighbors.

Rep. Michele Bachmann slammed CRA in an appearance on Larry King Live on Monday night. “Look at the housing crisis. Government has to take its share of the blame,” she said. “After all, the government was goading these mortgage lenders, saying, ‘You’re redlining. You’re being discriminatory. If you don’t give loans out to marginally credit-worthy people we’re going to come after you.’ In fact, Chairman Barney Frank has made comments like that as well.”

..

“This is the height of chutzpah,” said Rep. Keith Ellison in a scathing statement on Tuesday. “To suggest that the greatest financial crisis we face since the Great Depression was caused by legislation that was created to help PREVENT low-income individuals from assuming high-cost, subprime loans that have caused the crisis today is absurd.”

“To suggest that struggling families trying to keep their homes brought down the ‘Titans of Commerce,’ ‘The Masters of the Universe’ on Wall Street, is ludicrous. To suggest someone who is raising three children while holding down two minimum-wage jobs on a high school education was able to stall one of the greatest economic engines on earth needs their head examined,” Ellison said.

And empirical data back Ellison’s assertion. A number of studies show that CRA has in fact decreased predatory lending in minority neighborhoods and that banks subject to CRA regulations were less likely to offer subprime loans.

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One Response

  1. […] comments received a swift rebuke from fellow Minnesota congressman Keith Ellison: “This is the height of chutzpah,” said Rep. Keith Ellison in a scathing statement on Tuesday. […]

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