How the Community Reinvestment Act promoted today’s financial troubles

The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation’s banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being.

It doesn’t specifically address today’s financial troubles, but that’s because this article was published when Bill Clinton was still President. Note that $1 trillion figure listed above is much larger than the $700 billion requested by the Bush Administration, even without factoring in inflation.

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