LISC Continues Defense of CRA
Howard Husock's op-ed published in The New York Times (12/10/08) continues to argue that the Community Reinvestment Act (CRA) helped cause the current economic crisis. LISC disagrees with Mr. Husock's argument and responded with the following letter to The New York Times editor:
16 Dec 2008
To the Editor:
In the op-ed "Housing Goals We Can't Afford" by Howard Husock, he singles out the Community Reinvestment Act (CRA) as the main reason for our current economic crisis. Unfortunately, the facts just don't support it
CRA does not compel banks to lend to poor borrowers who have little ability to pay back those loans. That's just bad banking. It does, however, require them to lend and invest in the communities in which they take deposits. As such, it has helped to remedy a long-standing problem in which qualified borrowers in low-income areas had no access to credit.
Moreover, delinquency and foreclosure rates for subprime borrowers are comparable across communities of all income levels. This reinforces what years of experience have already told us: Low-income residents are not, by definition, poor credit risks. Unsuitable mortgage products are.
The current meltdown is not a verdict on CRA. It's a reflection of the decisions some financial institutions made to maximize gains at the expense of sensible risk management.
Michael Rubinger, President and CEO
Local Initiatives Support Corporation
New York
> Download this letter (PDF, 35 KB)
> Read The New York Times' editorial on CRA - "Housing Goals We Can't Afford" (Published: December 10, 2008)
Article Type: News