"Regulation Caused the Subprime Crisis"

The myth goes something like this: "The gubment made dem banks lend'ta minawratas, an' we'all know dey can't pay no goddamm bills"

 Of course the data shows that this is all a ruse by the race-baiting anti-regulation propagandists.  The report on the subprime crisis done by the Federal Reserve Board of Dallas shows that:

"No major changes have been made to the CRA or its enforcement since 1995. The subprime crisis was triggered by poorly performing mortgage loans originated between 2004 and 2007. This chronological gap weakens the contention that the CRA is a major cause of the crisis.
Contrary to the widely held perception that most higher-priced loans were made to lower-income groups targeted by the CRA, 55 percent of higher-priced loan originations went to middle- and upper-income borrowers or borrowers in middle- and upper-income neighborhoods in 2005 and 2006.
Only 6 percent of higher-priced loan originations made by banking institutions and their affiliates in 2005 and 2006 went to lower-income borrowers or borrowers in lower-income neighborhoods within CRA assessment areas"



and further:

"Mortgage purchase data counter the notion that the CRA indirectly created an incentive for independent mortgage companies to make higher-priced lower-income loans. In 2006, banking institutions bought only about 9 percent of independent mortgage companies’ loans; 15 percent of those loans were higher-priced loans to lower-income borrowers or neighborhoods"

rather, the report concludes:

"There appears to be a direct correlation between the quality of subprime loans and the degree of regulatory oversight. Nondepository mortgage providers such as mortgage lenders and brokers are regulated by 50 different state banking supervisors instead of a federal body responsible for comprehensive oversight. Comptroller of the Currency John Dugan reported that these companies 'originated the overwhelming preponderance of toxic subprime mortgages' and these loans 'account for a disproportionate percentage of defaults and foreclosures nationwide, with glaring examples in the metropolitan areas hardest hit by the foreclosure crisis.' "

It would seem that the most obvious (if not the most classist, racist, and what have you) conclusion bears out; that the crisis was not caused by governance, but rather a lack of governance

http://dallasfed.org/ca/bcp/2009/bcp0901.cfm