It's ridiculous, because CRA loans were a tiny fraction of delinquent loans, they didn't go bad at meaningfully higher rates, the non-bank mortgage lenders like New Century that made the worst loans weren't covered by the CRA, something like 15% of loans over $1m were delinquent.
It's beside the point, because a well-designed financial system wouldn't blow up insurance companies, S&Ls, brokers, all because banks are required/encouraged to make a small percentage of their loans in underserved areas.
It's called confirmation bias, humans can and will believe what makes them comfortable.
It's ridiculous, because CRA loans were a tiny fraction of delinquent loans, they didn't go bad at meaningfully higher rates, the non-bank mortgage lenders like New Century that made the worst loans weren't covered by the CRA, something like 15% of loans over $1m were delinquent.
It's beside the point, because a well-designed financial system wouldn't blow up insurance companies, S&Ls, brokers, all because banks are required/encouraged to make a small percentage of their loans in underserved areas.
It's called confirmation bias, humans can and will believe what makes them comfortable.