Congressional Problem Creation

The Community Reinvestment Act of 1977 [remember its name], whose provisions were strengthened during the Clinton and Bush administrations, is a federal law that mandates or intimidates lenders to offer credit throughout their entire market and discourages them from restricting their credit services to high-income markets, a practice known as redlining.

The Community Reinvestment Act encouraged banks and thrifts to make so-called "no doc" and "liar" loans to customers who had no realistic ability to pay them back. A decade of monetary expansion by the Federal Reserve Bank, contributing to the housing bubble, encouraged lending institutions to take risks they otherwise would not have taken.

Government actions created the subprime crisis and now government-proposed "solutions," such as foreclosure holidays, bailouts and yet more regulation of financial institutions, to the problems they created will create more problems...

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