You should consider reading the article you linked. ""However, the Financial Crisis Inquiry Commission formed by the US Congress in 2009 to investigate the causes of the 2008 financial crisis, concluded that "the CRA was not a significant factor in subprime lending or the crisis"."" - http://en.wikipedia.org/wiki/Community_Reinvestment_Act#Repo...
> According to American Enterprise Institute fellow Edward Pinto, Bank of America reported in 2008 that its CRA portfolio, which constituted 7% of its owned residential mortgages, was responsible for 29 percent of its losses. He also charged that "approximately 50 percent of CRA loans for single-family residences ... [had] characteristics that indicated high credit risk," yet, per the standards used by the various government agencies to evaluate CRA performance at the time, were not counted as "subprime" because borrower credit worthiness was not considered.[125][126][127][128] However, economist Paul Krugman argues that Pinto's category of "other high-risk mortgages" incorrectly includes loans that were not high-risk, that instead were like traditional conforming mortgages.[129] Additionally, another CRA critic concedes that "some of this CRA subprime lending might have taken place, even in the absence of CRA. For that reason, the direct impact of CRA on the volume of subprime lending is not certain."
So if you're basing your argument on the authoritative application of the label "sub-prime," please feel free to indulge in as much or as little semantic pedantry as you like.
Pinto was pretty much the central figure in CRA-blaming, and the vast majority of his claims have been repeatedly and exhaustively debunked.
In a piece deeply critical of Fannie and Freddie, William Black (again of S&L crisis fame) addresses Pinto's attempts to place Fannie and Freddie's terrible risk management on the back of CRA regulation:
Pinto estimated that Fannie and Freddie held “34% of all the subprime loans and 60% of all Alt-A loans outstanding” [p. 7]. Pinto seems to have treated subprime loans as non-liar’s loans, but that is clearly incorrect. I cited Credit Suisse’s finding that by 2005 and 2006, half of all subprime loans were also stated income (liar’s loans). The presence of such large amounts of Alt-A loans is one of the demonstrations that Pinto, Wallison, and the Republican Commissioners’ “Primer” are flat out wrong to claim that it was affordable housing goals that drove Fannie and Freddie’s CEOs’ decisions to purchase loans they knew would cause the firms to fail. That claim doesn’t pass any logic test. One of its unobvious flaws is that no one was making Fannie and Freddie buy liar’s loans. For the reasons I’ve explained, and Pinto admits, Fannie and Freddie actions with respect to liar’s loans were the opposite of what they would have been if they were trying to demonstrate that the loans were made for affordable housing purposes.
The GSEs were deeply irresponsible with their lending and were poorly run, but both were prevalent long before any CRA impact would have been felt. If AEI / Pinto / Wallison had focused on the actual causes of the mortgage / financial crisis instead of trying to blame poor people and Barney Frank, the world would be a lot better off.
