CRA and the Financial Crisis

Former Federal Reserve Governor Randall S. Kroszner said in a speech on December 3, 2008: “Contrary to the assertions of critics, the evidence does not support the view that the CRA contributed in any substantial way to the crisis in the subprime mortgage market.” Federal Reserve staff analysis on the relationship between CRA and the subprime crisis is included in footnote 4 to the speech.

The full text of his speech, with all footnotes, is here

What is very interesting, if you read the data in footnote 4 is that only 6 percent of all higher-priced loans in 2006 were made by CRA-covered institutions or their affiliates to lower-income borrowers or neighborhoods in their assessment areas.