This very good article in IBD is discouraging on so many levels.
The Community Reinvestment Act was an unmitigated failure. Its expressed goal of bring more minority citizens into an “ownership society” was laudable. Owning property for the most part is a good thing. People feel like they have a stake in their communities. But the program failed because many folks were not ready to own property.
Though for the most part owning is good, it can be a pain. Upkeep, and taxes, and homeowners association fees, and insurance, and dishwashers exploding, it’s not all great. Plus unfortunately for many people their home is their greatest “investment” (at least this is what most Americans are told) and one’s property can go down in value.
The CRA encouraged poor underwriting quality and was a major contributor to the housing crash. (Though it was the easy money from the Fed which enabled many of the excesses of the CRA. The Federal Reserve was the prime mover.) The banks cashed in on the program when the getting was good, and then the tide went out and millions found themselves underwater in homes which had lost value.
It was a disaster.
Now it appears we’re trying to start the whole thing up again, only now there is the Consumer Financial Protection Bureau and its “Consumer Advisory Board” which is chock full of trial lawyers. These lawyers were contracted by the CFPB in 2012 to the tune of $150 million to find violations of lending law. We the taxpayers are basically funding the trial lawyers while they look for leads. It’s all well and good to get $150 million from the American taxpayer, but class action suits are where the real big cheese is.
Classic crony capitalism dressed up again as social justice.