The Community Reinvestment Act does not appear to have had any positive effect on lending to residents of LMI neighborhoods. In fact, it appears to have had a negative effect on CRA lenders and LMI residents alike… While both CRA- and non-CRA lenders have increased the number of loans to low-income borrowers, the financial soundness of CRA-covered institutions decreases the better they conform to the CRA.
Michelle Minton, “The Community Reinvestment Act’s Harmful Legacy: How It Hampers Access to Credit”, Competitive Enterprise Institute paper no.132.
Thursday, March 20, 2008
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