The Community Reinvestment Act did not lead to risky lending.

I originated many CRA loans. The guidelines were relatively stringent:

-- Only 30 year FRM and 5 year ARM were allowed
-- Full doc only (no stated income or other types of liar loans)
-- All assets verified (no phantom down payments)
-- Credit fully vetted (even if borrower had no institutional credit; they had to have some credit-type obligations)

I agree with Sheila Bair on CRA:

http://www.ritholtz.com/blog/2008/12/fdic-chairman-sheila-ba...

“Point in fact,” she said, “only one in four higher-priced first mortgage loans were made by CRA-covered banks during the hey-day years of subprime mortgage lending. The rest were made by private independent mortgage companies and large bank affiliates not covered by CRA rules.”

And “Let me ask you,” she proceeded. “Where in the CRA does it say to make loans to people who can’t afford to repay? Nowhere.” The facts are simple, Bair said. The lending practices that are causing problems today were driven by a desire for more market share and revenue growth, not because the government encouraged certain lending practices.