Cityscape: Volume 19 Number 2 | Commentary: What Can We Learn From Government Attempts To Modify the Allocation of Mortgage and Consumer Credit in the United States?

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The CRA Turns 40

Volume 19, Number 2

Mark D. Shroder

Michelle P. Matuga

Commentary: What Can We Learn From Government Attempts To Modify the Allocation of Mortgage and Consumer Credit in the United States?

Anthony Yezer
George Washington University

This commentary considers the Community Reinvestment Act (CRA) in historical context. CRA reflects one of many government attempts to influence the allocation of mortgage and consumer credit, but many of these interventions have had adverse outcomes. This commentary is written in the hope that those who are aware of history will stop repeating it. Specifically, I argue that lawmakers have been too quick to succumb to political pressures and have failed to follow basic economic principles when creating mortgage market policies. As a result, expanding access to credit has been prioritized over the safety and soundness of the housing and mortgage markets.