Community Reinvestment Act
The Community Reinvestment Act ( CRA short ) is a federal law in the United States, redlining since the 1970s, so-called, that is, the restriction of credit offers to affluent residential areas or layers should be avoided. The CRA was decided in 1977 under President Jimmy Carter and has since been amended several times.
In particular, the changes under President George HW Bush, Bill Clinton and George W. Bush were to forgive in the U.S. in the context of the financial crisis in 2007 in the discussion, as banks were encouraged loans to creditworthy borrowers unworthy. Economists such as Paul Krugman disagreed. According to Professor Michael S. Barr came only a quarter of subprime mortgages from financial institutions, which the CRA fully documents. The worst excesses have given it with the financial institutions that were the least under supervision. A study by Traiger & Hinckley LLP, according to have financial institutions that were subject to the CRA, less Subprimekredite awarded as not subject to the CRA competitors. Similar comments came from economists at the Federal Reserve and the Federal Deposit Insurance Corporation.
In hearings of the U.S. House of Representatives in February 2008, it was determined that only a fraction of the contracts in the U.S. subprime mortgage fell under the CRA, the majority of which has been awarded independent. In the contracts awarded under CRA loans, it also has a lower failure rate than the given number of freely chosen. Between the home support program of the U.S. government and the financial crisis, there was no causal relationship. Also Luci Ellis of the Bank for International Settlements ( BIS) is in her study The housing meltdown: Why did it happen in the United States? to the conclusion that the CRA was not the cause of the financial crisis.