Comptroller of Currency Responds to Claims that CRA Contributed to the Subprime Lending Crisis

In a speech before the Enterprise Annual Network Conference today, Comptroller of the Currency John C. Dugan rejected claims that the Community Reinvestment Act was responsible for the subprime lending crisis:

* * * While not perfect, CRA has made a positive contribution to community  revitalization across the country and has generally encouraged sound community development lending, investment, and service initiatives by regulated banking organizations.

CRA is not the culprit behind the subprime mortgage lending abuses, or the broader credit quality issues in the marketplace. Indeed, the lenders most prominently associated with subprime mortgage lending abuses and high rates of foreclosure are lenders not subject to CRA. A recent study of 2006 Home Mortgage Disclosure Act data showed that banks subject to CRA and their affiliates originated or purchased only six percent of the reported high cost loans made to lower-income borrowers within their CRA assessment areas.

Over the last ten years, CRA has helped spur the doubling of lending by banking institutions to small businesses and farms, to more than $2.6 trillion. During this period, those lenders more than tripled community development lending to $371 billion.

Maybe he read Alan White's post!