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A few days ago I posted a comment complaining about mischaracterization of the Community Reinvestment Act of 1977, by Charles Krauthammer equating it with an invitation to relax lending standards. Essentially laying the blame for today's problems on laws which corrected long standing credit discrimination.

Today I seem the same canard from Jeff Jacoby in the Boston Globe.

Jacoby says

The roots of this crisis go back to the Carter administration. That was when government officials, egged on by left-wing activists, began accusing mortgage lenders of racism and "redlining" because urban blacks were being denied mortgages at a higher rate than suburban whites.

Later in the same piece he says

A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense.

Funny. I went the FRB of Boston web site, and found among other things*, the PDF Closing the Gap: A Guide to Equal Opportunity Lending.

I did not see in this document any advice to disregard common sense.

I did see statements like:

Credit History:
Policies regarding applicants with no credit history or problem credit history should be reviewed. Lack of credit history should not be seen as a negative factor. Certain cultures encourage people to "pay as you go" and avoid debt. Willingness to pay debt promptly can be determined through review of utility, rent, telephone, insurance, and medical bill payments. In reviewing past credit problems, lenders should be willing to consider extenuating circumstances. For lower–income applicants in particular, unforeseen expenses can have a disproportionate effect on an otherwise positive credit record. In these instances, paying off past bad debts or establishing a regular repayment schedule with creditors may demonstrate a willingness and ability to resolve debts.

Successful participation in credit counseling or buyer education
programs is another way that applicants can demonstrate an ability to
manage their debts responsibly. (See the section on Buyer Education.)

(The latter point on credit counseling was also pointed out in a comment by SingularExistence responding to my own.)

Sounds like common sense to me.

*I also found Faith-Based Community Economic Development: Principles & Practices, which this agnostic finds pretty scary. One of the gems in the PDF:

Congregations with a "civic" orientation work at being good,
cooperative citizens of the community, helping out where they can, without
significantly challenging the status quo. Their emphasis is on individual
citizenship, in contrast to the corporate action of the "activist" congregations.
Activist congregations, who also want to be good citizens, see that goal as
requiring advocacy and change. The "sanctuary" orientation is the most
otherworldly in seeking to shield members from this world’s temptations and
prepare them for the world to come. The "evangelist" orientation sees the
church as an agent for changing individual lives.

Good stuff. My tax dollars at work.

Originally posted to FightersFate on Sun Sep 28, 2008 at 09:33 PM PDT.

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