In “Burning down the house”, George W. Wills writes: “Put on asbestos mittens and pick up “Reckless Endangerment,” the scalding new book by Gretchen Morgenson, a New York Times columnist, and Joshua Rosner, a housing finance expert. They will introduce you to James A. Johnson, an emblem of the administrative state that liberals admire…
“The 1977 Community Reinvestment Act pressured banks to relax lending standards to dispense mortgages more broadly across communities. In 1992, the Federal Reserve Bank of Boston purported to identify racial discrimination in the application of traditional lending standards to those, Morgenson and Rosner write, “whose incomes, assets, or abilities to pay fell far below the traditional homeowner spectrum.”
WATCHDOG: As one who can recall both the 1977 Act and the circumstances of the day, the Watchdog vouches for the accuracy of the excerpt from the below Wikipedia article:
“The Community Reinvestment Act (CRA, Pub.L. 95-128, title VIII of the Housing and Community Development Act of 1977, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.[1][2][3] Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining.[4][5]
“The Act requires the appropriate federal financial supervisory agencies to encourage regulated financial institutions to help meet the credit needs of the local communities in which they are chartered, consistent with safe and sound operation (Section 802.) To enforce the statute, federal regulatory agencies examine banking institutions for CRA compliance, and take this information into consideration when approving applications for new bank branches or for mergers or acquisitions (Section 804)
“Red lining”, discouraging loan making to Blacks in certain areas and often in general, was a tacit way that the white population kept African-Americans in the inner city, during a period in the nation’s history where the purchase of a home by a Black in a white neighborhood was both demeaning and risky. It took government action, yes during the Jimmy Carter administration, to allow African-Americans to live outside inner city ghettos.
To the extent there was relaxed credit requirements (which I do not recall), little if any problem ensued at the time. Red lining was practiced as much here in Lancaster as elsewhere. Until the late 1970s and early 1980s, Lancaster’s suburbs were de facto segregated communities. If in doubt, read “A City transformed” by David Schuyler, a former F & M professor.
http://en.wikipedia.org/wiki/Redlining
