Is the FCIC Going After the Community Reinvestment Act?

Probably not, but its members are.

Mark Thoma was surprised to learn that the Community Reinvestment Act, which has again and again been found "not guilty" in causing the crisis, is still one of the 22 issues that the Financial Crisis Inquiry Commission is investigating. That's not the commission's fault -- Chair Phil Angelides has to abide by the statute that established the commission, which requires the group to investigate these 22 areas, including "the legal and regulatory structure of the United States housing market."

This Time writer is unhappy that Angelides hasn't ruled out the CRA or any other potential reason yet, but there's no reason to be surprised about that: Angelides, like most people leading an ongoing investigation, isn't going to rule anything in or out until he's totally finished. As Thoma points out, given the vast preponderance of evidence that the CRA did not cause the crisis, the final report probably won't include the explanation unless the whole project turns into a joke.

On the other hand, commissioners like Peter Wallison have already announced their conclusions about what happened in the crisis, and well after the commission was formed. Wallison blames the CRA and, hey, in particular, Rep. Barney Frank: "If the financial crisis was caused by subprime mortgages and predatory lending, the government's own policies made it happen."

That's not exactly the kind of discretion we hoped for in a nonpartisan investigation. While Angelides is displaying some tact and a careful touch in managing this investigation, perhaps he should have a word with his colleagues about coming to the table with conclusions already in mind. It doesn't bode well for the FCIC's final product.

-- Tim Fernholz

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