Fed Chairman Bernanke Confirms To Menendez That Community Reinvestment Act Is Not To Blame For Foreclosure Crisis
Member of Banking Committee had written Bernanke for clarification to dispel accusations about the CRA
December 2, 2008
Washington - In response to U.S. Senator Robert Menendez's (D-NJ) request for clarification, Federal Reserve Chairman Ben Bernanke has confirmed that a homeownership program for low-income Americans is not to blame for the U.S.'s housing crisis. Bernanke points to safeguards within the Community Reinvestment Act as well as the Fed's own research as evidence that debunks recent attempts to pin the crisis on the CRA (http://menendez.senate.gov/pdf/112508ResponsefromBernankeonCRA.pdf).
In his response, Chairman Bernanke writes: "Our own experience with CRA over more than 30 years and recent analysis of available data, including data on subprime loan performance, runs counter to the charge that was at the root of, or otherwise contributed in any substantive way to, the current mortgage difficulties."
Today, Senator Menendez said: "Let the blame directed at the Community Reinvestment Act end now. It has been a positive program that has helped millions of low-income Americans realize the American Dream in a responsible manner. Patently false attempts to pin the housing crisis on this worthwhile program are not only cynical, but they also distract from the important task of getting to the root of the problem and preventing a repeat. I was confident that the people who know our economy best, starting with Chairman Bernanke, would see these false accusations for what they are, and I am glad that the Chairman has repudiated them in no uncertain terms."
Senator Menendez, a member of the Senate Banking Committee, had written Bernanke last month requesting this clarification (http://menendez.senate.gov/pdf/102408MenendezLetteronCRA.pdf).
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