Jason Lefkowitz says

This "study" appears to be another attempt to pin the blame for the current crisis on legislation like the Community Reinvestment Act, which required lenders to eliminate discriminatory practices from their lending decisions. (An example of this would be "redlining", the practice by which lenders refused to give mortgages to minorities who tried to buy homes outside designated minority neighborhoods.)

Blaming the CRA for the subprime crisis has become a favorite talking point among right-wingers, since it allows them to pin the blame on Democrats and black people rather than investment bankers and Republicans. If only the evil government hadn't forced us to loan money to to black people, the bankers say, none of this would have happened.

But there is little objective evidence to support this claim. Consider that 80% of the problematic subprime loans were made by institutions not subject to the CRA or other regulations the study is complaining about. The lenders who caused the subprime crisis were not depository banks; they were a new breed of non-bank lending companies that did not exist when the CRA was written. Additionally, the data shows that these new non-bank companies gave out subprime loans at twice the rate of depository banks, which doesn't suggest that fair-housing laws drove lenders to increase their exposure to risk. If anything, it suggests that those laws drove them in the opposite direction.

The Independent Institute is a corporate-funded libertarian think tank that has long advocated against any government intervention in the economy, most notably in 1999 when they were paid by Microsoft to run full-page ads in newspapers criticizing the Department of Justice for bringing antitrust charges against that company. So it's not surprising that they would be out now claiming that helping minorities be treated fairly by lenders is what brought the economy down. But just because they're spouting that line doesn't mean anybody should swallow it.

Oscar says

You're comment wasn't approved. I guess I had programmed in something to detect views not wholly inline with my own.

As to the report, I didn't conclude that is was trying to pin the blame on minorities. Instead, policies meant to encourage broader lending, also extended credit to speculators and flippers. The latter is what inflated the housing bubble, and encouraged fairly risky investment/lending all around.

Oscar says

Jason Lefkowitz says

I guess I don't understand how anyone can read passages like

It is the thesis of this report that this large increase in defaults had been a potential problem waiting to happen for some time. The reason is that mortgage underwriting standards had been undermined by virtually every branch of the government since the early 1990s. The government had been attempting to increase home ownership in the U.S., which had been stagnant for several decades. In particular, the government had tried to increase home ownership among poor and minority Americans. Although a seemingly noble goal, the tool chosen to achieve this goal was one that endangered the entire mortgage enterprise: intentional weakening of the traditional mortgage-lending standards.

... as anything other than an assertion that the root cause of the crisis is the CRA and other attempts to "increase home ownership among poor and minority Americans".

And passages like this beggar belief:

Let’s not blame the speculators here. There is nothing wrong with speculation or speculators. At fault is a mortgage system run by flexible underwriting standards, which allowed these speculators to make bets on the housing market with other people’s money. It was a system that invited the applicant to lie about income. It was a system that induced applicants to watch a video instead of providing solid evidence about their financial condition.

Even that would not be so bad if the people making the money available were aware of its use and knew that they would have recourse to getting their money back. But the money for the speculation was made available by lenders who believed the housing and regulatory establishment when this housing and regulatory establishment said that such loans were safe. Since the housing and regulatory establishment consisted of mighty government agencies and highly educated academics, it was not unreasonable for the lenders to assume that the claims made for flexible underwriting standards were correct. Unfortunately, the claims were not correct although most of the housing and regulatory establishment continue to argue otherwise.

In other words, the bankers went against their better judgment to make these loans because "mighty government agencies" assured them they would be safe, and they quailed at the prospect of pushing back.

Does that sound like any investment banker you ever heard of? Quailing at the prospect of challenging bureaucrats and academics? If they really felt that way the screams from Wall Street would have been heard from coast to coast, which they of course were not. Wall Street wanted to make these loans because they thought they could make a ton of money off of them. Or in other words, "Law didn't make them lend. The profit motive did."

(For more detail, Slate has a piece today rounding up various other right wing outlets peddling these same talking points and debunking them pretty comprehensively.)