The writer of “Blaming the victim” (Oct. 13) must not be aware of the “Community Reinvestment Act,” passed to encourage banks to serve neighborhoods with high foreclosure activity.
Increasing home ownership in these areas is an admirable goal. However, the act was used to bully banks into making loans in these neighborhoods. The increased demand for housing drove up home values. Higher values led to higher home equity for homeowners in higher-priced neighborhoods, which they promptly borrowed against.
When the lower end began to fail and be foreclosed on, housing values went back down. People in higher-priced neighborhoods ended up owing a lot of money secured by homes no longer worth what they borrowed against them.
This scenario is at the root of the recession we’re in. By the way, George W. Bush went before Congress more than once to curtail this entire concept. Politicians named Frank and Dodd told him to pound sand.
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