More Government Won’t Fix The Mortgage Mess

August 19th, 2010 at 6:19 pm | 21 Comments |

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Opening a conference on the future of housing finance, discount Treasury Secretary Timothy Geithner announced his support for rainbows, stuff the American flag, tadalafil and a “carefully designed guarantee in a reformed system, with the objective of providing a measure of stability in access to mortgages.”   Okay.  He wasn’t explicit about the rainbows or Old Glory, but a speech about either of those two topics would have said just as much about the administration’s real intentions for housing finance than the remarks Geithner delivered.

Nearly everything Geithner said is pretty obvious. Quite simply, there’s no reasonable scenario that involves the government taking a totally hands-off attitude towards the mortgage business. The 30 year self-amortizing mortgage that most American home-buyers want probably wouldn’t have existed in the first place without government intervention. The tax code, as currently structured, makes it economically irrational for most middle class people not to own a home. Even if the government ended all explicit intervention with the mortgage market (abolishing Fannie, Freddie, and the Federal Housing Administration), its continuing role in guaranteeing depository institutions, insurers, small business administration loans, VA loans, FEMA loans, and more would keep the governments’ hands all over the mortgage business.

Direct and indirect subsidies for mortgages are almost certainly the most widely provided government benefit. Somewhere upwards of 80 percent Americans will become homeowners at some point and, even with the housing crisis, over 65 percent own homes today. Since the United States has one of the highest homeownership rates in the world—the only countries with higher rates are places that people often inherit homes (Spain) or that concentrate a very large portion of their population in a single metropolitan area (Israel and England)—a theoretical total public sector withdrawal from the mortgage market would likely raise even more angry mobs than would major reforms to Social Security.

Thus, Geithner’s “newsmaking” comments affirming a public role in the mortgage market shouldn’t  bother anyone besides the most wild eyed libertarian. In fact, what he didn’t say is a lot more important than anything he said. If the Obama administration wants to make a real difference—and fix the problems stemming from the bipartisan “homeownership Über Alles” strategy of the Clinton and George W. Bush administration—it needs to offer a lot more than the weak gruel Geithner  and company have served up so far.

Recent Posts by Eli Lehrer

21 Comments so far ↓

  • armstp

    I always found it funny why in this country you are allowed to deduct your mortgage interest payments? I do not think you can do that in any other country. Because of this are not renters subsidize those who own homes?

    The fixed 30 year mortgage is also a very generous financing option that you do not really see in many other countries. Is that because these loans are backed by the govt so the default risk of the borrower is not really reflected in the structure and cost of the financing? Again, why are renters subsidizing home owners in this country?

  • Oldskool

    “why are renters subsidizing home owners in this country?”

    Call it an unintended consquence of encouraging access to capital. Similar to how married vs single filers used to be different. May still be, not sure.

  • armstp


    You can still get plenty of access to capital like in all other countries without these subsidies to homeowners by those who rent or don’t have mortgages.

    In fact, there is probably too much access to capital and that is why we have real estate bubbles. The market is distorted when the risks do not match the returns/payments in mortgages.

    I think this was all done to encourage home ownership. Seems very “socialist” to me. Ha!

    It also sets up a funny dynamic where those renters, who are often people with less wealth, are subsidizing the wealthy, who tend to be homeowners. It does not make any sense.

    I guess like a lot of things, like why we subsidize corn and ethanol production while tariffing cheaper Brazilian ethanol, there is a lot of stupid math in this country. A complete waste of govt money. I guess it doesn’t help that Iowa is the first presidential primary.

    The tax deductibilty also results in people taking very big loans, which they often cannot afford and keeps them in debt longer as there is little incentive to pay down your mortgage. This may hurt the economy if this is the cause of mortgage defaults and blow ups.

    And then there is this:

    “Researchers find that the current MID is not a cost-effective tool for increasing homeownership because its main beneficiaries are not individuals on the margin between renting and owning. The deduction is only available to itemizing taxpayers and its value rises with an individual’s tax rate. The result is that most benefits from the deduction are concentrated at the high end of the income distribution, where homeownership rates are likely to be high with or without the deduction.”


    There is some recent talk about getting rid of mortgage interest deductiblity. I would personally be hurt like most people, but I think getting rid of it could make some sense.

    In 1913, when this tax deduction started it was not at all targeted at increasing home ownership.

    See this for more info on its creation in 1913:

  • JonF

    Re: I always found it funny why in this country you are allowed to deduct your mortgage interest payments?

    It’s a relic from the time (pre-1986) when you could deduct just about any and all interests, which in turn aws justified as evening the playing field between businesses (which still can deduct interest) and individuals.

  • sinz54

    armstp: Is that because these loans are backed by the govt so the default risk of the borrower is not really reflected in the structure and cost of the financing?
    No. Only FHA mortgages, intended to subsidize home ownership for the poor, are backed by the government.

    The 30 year self-amortizing mortgage was created by Congress in the 1930s. The original purpose was to enable workers to buy and keep a home, despite the terrible economic conditions of the Great Depression.

    Prior to the 1930s, a typical home mortgage had maybe 10 years’ worth (at most) of interest-only payments, followed by a huge balloon payment to pay off the principal. Workers who lost their jobs found themselves unable to make the huge balloon payment at the end, and the banks foreclosed on their homes.

    The 30 year mortgage has worked in subsequent recessions too. If a worker got laid off, he might be able to continue making some mortgage payments by drawing on his savings or other assets, until he could find a new job. In the meantime, he didn’t lose the accumulated equity in his home. If he found a new job in another locale, he could sell his home, recoup the equity he had built up in it–and use that equity as a down payment on a home in his new locale.

    Unfortunately, that’s not working anymore, due to structural unemployment. We now have workers whose jobs and careers are gone for good, due to outsourcing or automation. These workers aren’t ever going to get jobs that pay as well as the jobs they lost, at least not without years of retraining.

  • sinz54

    Mr. Lehrer should also have mentioned one other way that the Government intervened in the housing market: Starting in the late 1950s, state and Federal laws legalized the condominium concept.

    Condominiums actually date back to the Roman Empire–but in the United States, they are a relatively new innovation, coming along only starting in 1960.

    Condominiums offer the convenience of apartment living: Condominiums can be built in dense suburban or even urban areas where single-family homes wouldn’t make sense. And the condo association sees to it that the lawn is mowed and the building is maintained so you don’t have to. This made home ownership popular even among single people.

    Without condominiums, there wouldn’t be too many yuppies.

  • jorae

    “The UNREGULATED PLAYERS IN THE PRIVATE SECTOR WEAKENED LENDING STANDARDS, most of whom have gone bankrupt or are now in deep trouble.”

    These are all the mortgage walkaway trustee sale states, meaning they are non-judicial foreclosure states.
    In those states, generally, when they foreclose on you, they cannot pursue you for their financial losses.

    Many, such as California, do in theory allow a lender to choose judicial foreclosure but in those cases the lenders only do so if a borrower has significant other assets. This is the “one action” rule that lets the lender either pursue non-judicial foreclosure, at lower cost and less time, or judicial foreclosure that costs more money and takes more time but lets them go after you for their financial losses.

    Short Sales…..Banks
    District of Columbia (Washington DC)
    Montana (as long as non-judicial foreclosure is used)
    Nevada – note that the lender CAN get a deficiency judgment (See below)
    New Hampshire
    Texas (but even in a non-judicial foreclosure, the lender can pursue a deficiency judgment)
    West Virginia

    These are states that also allow non-judicial foreclosure, and/or where non-judicial foreclosure is more common and deficiency judgments can be obtained more easily:
    North Carolina
    Rhode Island
    South Dakota

    When the banks kept the loan and did not sell it to a secondary lender, what Federal Laws protected the bank losses? Since the bank is basically using it depositors money, doesn’t this fall into FDIC and if so, it is a federally backed loan.

    Most “For Sales” signs I see in Oregon are being sold by banks.

    So if they are Fannie or stayed at the bank, both are backed by the Federal Government…

  • armstp


    No, that is not correct. Many many mortgages are directly or indirectly backed by the government. At least as investments. Not only FHA loans. Mortgages that are bought by Fannie and Freddie and securitized are indirectly backed by the government, given that Fannie and Freddie are supported by the govt. Fannie and Freddie allow banks and mortgage companies to write very long term low interest rates loans because they know Fannie and Freddie will take the risk off their hands. I think this distorts the market, as a lot of risk is pushed off to the taxpayer. Why aren’t there these long term 30-year low interest rate risky loans in other countries? Because banks and governments are more risk adverse in those countries. For example, you do not get these obscene low interest rate long term mortgages in the UK or Canada. And don’t even get me started on the more exotic variable rate mortgages that are also only in America.

    I think many, including many Democrats, are now talking about getting rid of Fannie and Freddie at some point in the future.

    Here is an interesting article:

  • jorae

    The purpose of Fannie and Freddie was to keep money moving…Capitalism requires this. By a bank selling the loan to them, they just opened their accounting to do another loan. This really surprises me that Republicans are fighting to get rid of Fannie and Freddie.

    But banks are covered by the FDIC anyway. If a bank uses it capital to support mortgages and that person goes into default, the bank just uses the FDIC money to get back the loss between what it sold for and what the short sell gets for it…

    So for the government to get out of the mortgage business, all three should be eliminated….Now that would be a free market….back to putting your life savings under the pillow – what foresight with the 2nd amendment!

  • Carney

    I note the glaring absence of any mention of the Community Reinvestment Act; the huge array of similar laws, regulations, and judicial decisions; and the vast hordes of lawyers, prosecutors, activists, and more, all of which has the result of forcing lenders to hand out loans to those who based on the numbers do not deserve them at all, or at the terms offered. This government-forced malinvestment, steering huge portions of capital toward the riskiest, even all but sure to default borrowers, is a sacred cow, zealously protected by deeply held and punishingly enforced taboos.

  • PracticalGirl

    Eli has a point. Just some quotes today:

    “Let me first talk about how to make sure America is secure from a group of killers, people who hate — you know what they hate? They hate the idea that somebody can go buy a home”

    “One of the things that we’ve got to do is to address problems straight on and deal with them in a way that helps us meet goals. And so I want to talk about a couple of goals and — one goal and a problem.”

    “We are here in Washington, D.C. to address problems. So I’ve set this goal for the country. We want 5.5 million more homeowners by 2010 — million more minority homeowners by 2010. (Applause.) Five-and-a-half million families by 2010 will own a home.”

    “And so what are the barriers that we can deal with here in Washington? Well, probably the single barrier to first-time homeownership is high down payments. People take a look at the down payment, they say that’s too high, I’m not buying. They may have the desire to buy, but they don’t have the wherewithal to handle the down payment. We can deal with that. And so I’ve asked Congress to fully fund an American Dream down payment fund which will help a low-income family to qualify to buy, to buy.”

    “The second barrier to ownership is the lack of affordable housing. There are neighborhoods in America where you just can’t find a house that’s affordable to purchase, and we need to deal with that problem. The best way to do so, I think, is to set up a single family affordable housing tax credit to the tune of $2.4 billion over the next five years to encourage affordable single family housing in inner-city America.”

    “The third problem is the fact that the rules are too complex. People get discouraged by the fine print on the contracts. They take a look and say, well, I’m not so sure I want to sign this. There’s too many words.”

    —-President George Bush-speech to HUD employees, June 18, 2002

    What followed was the worst government intervention in the housing industry in 70 years. Sorry, Carney- you want this to be direct cause and effect of a provision in place for over 4 decades. But the American Dream Down Payment act and the Zero Down Payment Act did more to destabilize the market than any thing ever done. Why else would it be that the GREAT majority of the failing mortgages now and in the past two years were written under these two provisions?

  • jabbermule

    PracticalGirl // Aug 20, 2010 at 11:05 am

    “…the American Dream Down Payment act and the Zero Down Payment Act did more to destabilize the market than any thing ever done. Why else would it be that the GREAT majority of the failing mortgages now and in the past two years were written under these two provisions?”

    I’m guessing that you’re someone who blames Bush for the financial crisis. Since the American Dream Down Payment was basically an extension of HUD policy dating back to when Henry Cisneros and Andrew Cuomo were HUD Secretaries under Clinton, are you saying that your biggest beef with George W. Bush, when it relates to socio-economic policy, is that he was too liberal?

    But even then, that’s not entirely an accurate picture. Don’t forget—as early as 2004, Bush started voicing concerns about risk in the mortgage market. In response, 76 House Democrats sent him a written statement that defended the risky policies that would ultimately lead to the financial meltdown; among these 76 House Dems included Nancy Pelosi, Charley Rangel, Maxine Waters…..and Barney Frank.

  • PracticalGirl


    Chill a bit on the rhetoric: We’re talking about the collapse of the real estate market in this post. Period.

    Here’s my “beef” with the Bush administration as it relates to this issue: They and their supporters, at least in hindsight, want to throw mud at the policies before them. “We KNEW this was all going bad, and it’s all the Democrats fault” seems to be the message. But where is their culpability?

    I have an enormous problem with the idea that the Bush administration “knew” that risky lending was a problem in 2004, yet brought to the floor (Republicans, not Democrats) the Zero Down Payment Act the very same year. Pushed for it, got behind it, got the votes and signed it into law. Really? They “knew”, and yet they continued to enact lending policies that made it possible for people who couldn’t really afford it to buy homes? That wasn’t the Democrats fault.

    I have an enormous problem with the fact that the Bush administration “knew” the risks in 2004 and chose NOT to act, even though they had complete control of the House, the Senate and the White House. It is certainly politically expedient to point to a letter from 76 Democrats, but honestly-this says more about the incompetence and impotent governing of the Republicans. If the Democrats were wrong and the Bush administration “knew” this, then where WERE they? Why did they cave? That wasn’t the Democrats fault.

    There have been many things that have contributed to this crisis, but to say from on high that the Bush administration “knew” better and yet continued to do worse (because the Democrats sent a letter) points to the very reason that they should never again have power. No vision, no ability to forward-think and no balls to do what they “knew” was right, even when there was nobody to stop them.

  • PracticalGirl

    More about what Bush “knew” in 2004:

    “…legislation allowing for no money down on some federally insured mortgages could cost taxpayers as much as $500 million over four years because of a higher rate of defaults, according to the Congressional Budget Office.”

    Economists warned:

    “Those who can’t afford large down payments usually don’t have enough savings to serve as a cushion if someone in the household gets sick or is laid off.”

    What did Bush do with the information? Nothing. He continued to push:

    “To build an ownership society, we’ll help even more Americans to buy homes,” Bush said in an Ohio speech to home builders. “Some families are more than able to pay a mortgage but just don’t have the savings to put money down.”

    He had the information of the real damages inherent in the programs, but it didn’t stop him. The damage report turned out to be accurate, although wildly underestimated.

    And that, Jabbermule, still isn’t the fault of the Democrats.

  • jabbermule

    PracticalGirl // Aug 20, 2010 at 1:27 pm

    “There have been many things that have contributed to this crisis, but to say from on high that the Bush administration “knew” better and yet continued to do worse (because the Democrats sent a letter) points to the very reason that they should never again have power. No vision, no ability to forward-think and no balls to do what they “knew” was right, even when there was nobody to stop them.”

    Although I find it laughable that you persist in solely blaming Bush and the Republicans for All Things Mortgage Meltdown—particularly since you criticize a policy that was, for all intents and purposes, a runaway social liberal experiment—perhaps you should take a look at the following quotes:

    “Fannie and Freddie should move into something that is more explicitly a subsidy”
    “I want to roll the dice a little bit more in this situation towards subsidized housing”

    That was Barney Frank, who was the chairman of the House Committee on Financial Services in 2007 and 2008 (just a little reminder: the Democrats were in charge of the legislative branch of the Federal government for the last two years of the Bush presidency). When the Office of Federal Housing Enterprise Oversight issued a 211-page report on problems with Fannie Mae’s accounting practices, Barney Frank responded with “it is clear that a leadership change at OFHEO is overdue.” Brilliant, Barney.

    Senator Chris Dodd, who was the chairman of the Senate Banking Committee during this time, criticized Bush for his attempt to reform Fannie and Freddie in 2007, stating that Bush “immediately reconsider his ill-advised” take on the matter. And in July of 2008, Dodd incredibly continued to maintain that Fannie Mae and Freddie Mac were “on sound footing.”

    Several months later, both Fannie and Freddie required over $300 billion in taxpayer funded federal bailouts.

    Going by your criteria for a certain political party ‘should never again have power,’ that goes double for Democrats. The genesis of the sub-prime mortgage mess was conceived of, and implemented by, liberal Democrats who wanted to expand homeownership for all Americans, regardless of ability to repay or creditworthiness. After all, both Democrats and Republicans argued, neighborhoods with greater percentages of homeownership were less likely to have crime, drug use, homelessness, etc, so it seemed like a worthy cause with all good intentions. But sometimes the road to hell is paved with good intentions.

    Bush, for his part, helped add fuel to the fire by encouraging this ill-conceived policy, but he starting backtracking as early as the fall of 2004, after he signed the Zero Downpayment Act. My biggest complaint with Bush was that he was too liberal with his backing of the American Dream Downpayment Act, and later was too spineless to stand up to the Democratically-controlled Congress when things started getting ugly.

    Again, Bush was too liberal.

  • jabbermule

    Here, this will save you some trouble:

    The Housing Boom and Bust – Thomas Sowell, author and Stanford economics professor
    Financial Fisco -Johann Norberg, author and Swedish historian

  • PracticalGirl


    You and I don’t disagree on much of this. My main point of contention with you and others who parrot some of the same is that you tend to gloss over the tipping point for everything. Everybody had a hand in this, but the truth is that the real estate market percolated along well for over 70 years (dips, yes) until Bush decided to deregulate and decimate lending laws that had protected lenders and homeowners alike for decades. He irresponsibly championed an “ownership society” by enacting lending laws that built a “renters-with-great-tax-benefits” society instead.

    “Bush was too liberal” may taste good in your mouth but it’s not quite correct. The “liberal” policies that you point to (Community Reinvestment Act etc) may have not been to your liking, but they were relatively controlled and specific in intent until Bush came and used a sledge hammer where a knock of the hand had been sufficient for decades. The majority of the bad loans today were written in the six years following the Amercian Dream Downpayment Act, right?

    “Liberal policies” had been serving a small segment well and performing decently (in comparison to other loans) for decades. I find it interesting that it wasn’t until Bush hit the White House-and misapplied liberal principles with the zeal of a free marketer- that the house of cards came down.

  • jabbermule

    PracticalGirl // Aug 20, 2010 at 3:51 pm

    “I find it interesting that it wasn’t until Bush hit the White House-and misapplied liberal principles with the zeal of a free marketer- that the house of cards came down.”

    Yes, it was interesting and completely misguided, but I don’t think we learned our lesson just yet. The Obama Administration is continuing with some of the same policies that got us here in the first place, only this time it’s the FHA and the Federal Reserve continuing the mess. The FHA has started writing mortgages for borrowers with bad credit and/or insufficient income—with only a 3.5% down payment requirement—and the Fed is purchasing these mortgages in the form of mortgage backed securities clearly riddled with suspect sub-prime debt that nobody in the financial sector is now dumb enough to purchase. I suppose 3.5% is better than 0% down, but guess who pays the bill if/when these bad loans start defaulting? Er, that would be you and me.

    As for Fannie Mae and Freddie Mac, they still have a $5 trillion exposure to the mortgage market—about 70% of the all mortgages in the U.S. last year—and just last month they lost another $20 billion combined, and are asking for another $20 billion in taxpayer dollars to cover their losses.

    And I agree with you…the greatest takeaway is that you can’t combine socialism and capitalism without disastrous economic consequences. Forcing lenders to make risky loans in the name of left-wing political policy and notions of “social justice,” and allowing them to have zero accountability, while even riskier financial derivatives are created out of those bad loans, all the while mitigating everyone’s risk with the promise of government bailouts, is a recipe for an economic disaster of epic proportions, and that is exactly what we got (and what we may get again). And the biggest loser of all? The American taxpayer.

  • iSteve

    Here’s the solution- “Equity Warrants”.
    Because of negative equity about 15 million potential homebuyers are “locked-out” of today’s housing market.
    Proposal- The underwater homeowner could–without bank approval–put their home on the market and accept any reasonable offer. To cover the loan payoff shortage an Equity Warrant (aka IOU) would be issued granting the holder rights to the future equity of any home the issuer subsequently owns within the next 10 (or 20) years. This would be recorded as a second lein. When the term of the Warrant expires, and is called, the holder of the warrant would convert the warrant to a promissory note secured by the issuer’s home equity. If at the expiration of the Warrant, the Warrant issuer still doesn’t have enough equity to settle the debt, an unsecured note could fill the gap.
    1. For the bank it’s an even exchange of an collateralized mortgage for an un-collateralized IOU. Plus the elimination of a potential default which would likely cost substantially more than excepting the warrant, even if it expires worthless.
    2. For the homeowner it’s an escape, trading a bad situation for a potentially better situation.
    3. For the housing market it’s a new buyer.
    4. No taxpayer money needed.

  • easton

    PracticalGirl, you go girl, great stuff.

    And we have the whole derivative market shell game. Since Banks were guaranteed against failure, deregulation without getting rid of the FDIC was bound to be a complete and utter disaster. Yes, Democrats and Republicans were both at fault, but as the saying goes, the buck stops at the Presidents desk. He deserves the Lions share of the blame, especially since it happened so late in his Presidency. We were supposed to have budget surpluses, not a financial meltdown. Of course the answer also was not to deregulate and get rid of the FDIC, but to have not deregulated at all.

    “the greatest takeaway is that you can’t combine socialism and capitalism without disastrous economic consequences.” Not true, you can do so if you have proper regulations. Canada avoided the entire housing crisis not because they are less socialistic than us, in fact they are moreso, but because they retained the regulatory structure that worked so well for so long.

    armstp, 30 year mortgages in China are pretty much standard. I had one, but paid off my home in 5 years (the value of expat salaries there is nice), but few native Chinese earn anywhere enough to do something like that.

  • armstp

    Community Reinvestment Act had nothing to do with subprime crisis

    Posted by: Aaron Pressman on September 29, 2008

    Fresh off the false and politicized attack on Fannie Mae and Freddie Mac, today we’re hearing the know-nothings blame the subprime crisis on the Community Reinvestment Act — a 30-year-old law that was actually weakened by the Bush administration just as the worst lending wave began. This is even more ridiculous than blaming Freddie and Fannie.

    The Community Reinvestment Act, passed in 1977, requires banks to lend in the low-income neighborhoods where they take deposits. Just the idea that a lending crisis created from 2004 to 2007 was caused by a 1977 law is silly. But it’s even more ridiculous when you consider that most subprime loans were made by firms that aren’t subject to the CRA. University of Michigan law professor Michael Barr testified back in February before the House Committee on Financial Services that 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision and another 30% were made by affiliates of banks or thrifts which are not subject to routine supervision or examinations. As former Fed Governor Ned Gramlich said in an August, 2007, speech shortly before he passed away: “In the subprime market where we badly need supervision, a majority of loans are made with very little supervision. It is like a city with a murder law, but no cops on the beat.”

    Not surprisingly given the higher degree of supervision, loans made under the CRA program were made in a more responsible way than other subprime loans. CRA loans carried lower rates than other subprime loans and were less likely to end up securitized into the mortgage-backed securities that have caused so many losses, according to a recent study by the law firm Traiger & Hinckley (PDF file here).

    Finally, keep in mind that the Bush administration has been weakening CRA enforcement and the law’s reach since the day it took office. The CRA was at its strongest in the 1990s, under the Clinton administration, a period when subprime loans performed quite well. It was only after the Bush administration cut back on CRA enforcement that problems arose, a timing issue which should stop those blaming the law dead in their tracks. The Federal Reserve, too, did nothing but encourage the wild west of lending in recent years. It wasn’t until the middle of 2007 that the Fed decided it was time to crack down on abusive pratices in the subprime lending market. Oops.

    Better targets for blame in government circles might be the 2000 law which ensured that credit default swaps would remain unregulated, the SEC’s puzzling 2004 decision to allow the largest brokerage firms to borrow upwards of 30 times their capital and that same agency’s failure to oversee those brokerage firms in subsequent years as many gorged on subprime debt. (Barry Ritholtz had an excellent and more comprehensive survey of how Washington contributed to the crisis in this week’s Barron’s.)

    There’s plenty more good reading on the CRA and the subprime crisis out in the blogosphere. Ellen Seidman, who headed the Office of Thrift Supervision in the late 90s, has written several fact-filled posts about the CRA controversey, including one just last week. University of Oregon professor and economist Mark Thoma has also defended the CRA on his blog. I also learned something from a post back in April by Robert Gordon, a senior fellow at the Center for American Progress, which ends with this ditty:

    “It’s telling that, amid all the recent recriminations, even lenders have not fingered CRA. That’s because CRA didn’t bring about the reckless lending at the heart of the crisis. Just as sub-prime lending was exploding, CRA was losing force and relevance. And the worst offenders, the independent mortgage companies, were never subject to CRA — or any federal regulator. Law didn’t make them lend. The profit motive did. And that is not political correctness. It is correctness.”