The battle over CRA

Over at businessinsider.com, John Carney writes:

The CRA led directly to lending practices that included extremely low to nonexistent down payments, outrageous loan to value ratios and other "innovations" that later became some of the best predictors of defaults and foreclosures.

The comments are interesting, as a variety of people either misrepresent his position (CRA was the source of all problems) or deny that it had anything to do with the meltdown. The reasonable position, it seems to me, is that it was one stream of many that combined to produce the river of disaster we experienced.

(A number of years ago at a financially-struggling college that I know something about, the president kept telling the faculty that retention was all important and that they needed to keep that in mind. When asked if that meant lowering standards, he would vigorously deny that he wanted standards lowered, but never provided any meaningful guidance as to what it was the faculty should be doing. Pretty much all the faculty accepted that what he really wanted was lower standards but he could not say that. The Fed's denial that CRA was intended to lower lending standards seems to be pretty similar to the college-retention situation.)