Lesson on lending

Larry Brown ("Placing the blame," Jan. 22) is engaging in partisan politics by solely laying the blame on Republicans for our economic decline. He claims it was not the Community Reinvestment Act passed by President Carter, a Democratic congress, and enforced by President Clinton that contributed to the subprime debacle. He faults private lenders for making many more riskier loans instead of Fannie Mae and Freddie Mac. So what? That does not absolve the tens of billions of dollars lost to CRA-regulated loans.

Under the CRA, if a bank wanted to make any changes in its business operations (getting into a new line of business, merging, or opening up a new branch) it had to prove to regulators that it had made "enough" loans to preferred borrowers. Community groups like ACORN (Association of Community Organizations for Reform Now) could then file petitions to stop the bank's activities or defeat them entirely.

Furthermore, beginning in 1995 the government forced banks to lower credit-worthy standards such as income verification, saving history, and mortgage payment relative to income. In other words banks were forced to make bad loans.

One needs only to look at Countrywide, once singled out by Fannie Mae as a role model for all other banks in its commitment to CRA lending. Once it was the largest mortgage lender with $600 billion in lowincome loans. Today it is bankrupt and merged with Bank of America.

It is easy to throw blame around, especially when Republicans are the new scapegoats, but if you analyze the facts it appears the giveaway of campaign promises by the Democrats to secure votes had much more to do with our economic decline. Shari Goodman Calabasas