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The functional role of financial regulations in fueling the current financial crisis is being hotly
discussed by scholastics, policymakers, and politicians. A focal bit of this warmed debate relates
to the role performed by the Community Reinvestment Act (CRA) in the growth of the financial
crisis and, specifically, its effect on pre-crisis mortgage lending standards. Though the community
groups and regulators strongly support the act, financial experts remain distributed in their
perceptions regarding the role of the CRA in lowering the underwriting standards. This level-
headed discussion is best shown by the perspectives taken by financial analysts who recommends
that the CRA act was a channel by which a U.S. Congress, stressed over developing income
disparity, towards growing low-income housing, combined with the surge of foreign capital
inflows to expel any discipline on the home loans. Conversely, many business analysts contend
that the Community Reinvestment Act (CRA) of 1977 was irrelevant to the subprime boom.
However, this paper provides detailed discussion about Community Reinvestment Act (CRA) of
1977, Fannie Mae and Freddie Mac and housing bubble in the following section.
Conclusion:
The Community Reinvestment Act (CRA) was approved in 1977 and has experienced some
The Community Reinvestment Act (CRA) has likewise rolled out significant improvements in the
behavior of numerous financial industries and federally regulated financial institutions. They have
have made banks consortia. In conclusion, this study has looked into the Community Reinvestment
Act (CRA) and related legislations, summarized pieces of literature which have evaluated the
effect of the Community Reinvestment Act (CRA), and related outcomes. One additional
unexpected result of extending the access to finance to low-and-moderate-income borrowers is on
the supply side will be the expanding frequency of the predatory lenders. Whereas the predatory
lending might be beneficial and increase access as well, its general effect might be negative on the
borrowing community. It may serve as a new issue for the efficient market discussion.