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The CRA has created opportunities for rent seeking and financial and logistical burdens for all lenders. The Act forces lenders to spend money, time, and resources on documentation, PR, and other compliance costs. Community Reinvestment Act In , sympathetic members of Congress got the Home Mortgage Disclosure Act amended to force banks to collect racial data on mortgage applicants; this allowed various studies to be ginned up that seemed to validate the original accusation… bank regulators required the loosened underwriting standards, with approval by politicians and the chattering class. A strengthening of the Community Reinvestment Act required banks to find ways to provide mortgages to their poorer communities. It also let community activists intervene at yearly bank reviews, shaking the banks down for large pots of money. Community Reinvestment Act The subprime mortgage market, which makes funds available to borrowers with impaired credit or little or no credit history, offers a good example of competition at work…To the contrary, it was lenders in the control group that refocused their efforts in line with the mids boom in lending in low-income neighborhoods. In fact, lending in low-income neighborhoods grew faster than other types of lending at institutions not covered by CRA, whereas low-income lending grew at the same rate as other types of lending activity for CRA-covered lenders.


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