Once again...Paul Krugman doing work....

I have been kicking around a couple posts in my head the last couple of days, but until I can get my ideas sorted on those I thought I would instead post this blog entry by Dr. Krugman, who just absolutely demolishes the idea that CRA (community re-investment act) was at the heart of the housing crisis. The charts he posts are pretty damning:

Just to repeat the basic facts here:

1. The Community Reinvestment Act of 1977 was irrelevant to the sub-prime boom, which was overwhelmingly driven by loan originators not subject to the Act.

2. The housing bubble reached its point of maximum inflation in the middle years of the naughties:

Robert Shiller

3. During those same years, Fannie and Freddie were sidelined by Congressional pressure, and saw a sharp drop in their share of securitization:

FCIC

while securitization by private players surged:

FCIC

Of course, I imagine that this post, like everything else, will fail to penetrate the cone of silence. It’s convenient to believe that somehow, this is all Barney Frank’s fault; and so that belief will continue.

So yeah when someone brings out the tired trope that poor people buying houses caused the financial collapse....you can drop this on them....or hit them with a smelly fish.

-Cheers