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CU System
CEO letter CRA not to blame for subprime mess
CHICAGO (11/24/08)--A writer in American Banker is "dead wrong" in blaming the subprime mortgage crisis on the Community Reinvestment Act (CRA), says the CEO of a Chicago-based credit union. David Mooney, CEO of Alliant CU, a $5.693 billion asset credit union based in Chicago, expressed the opinion in a letter to the publication's editor published Friday. Although he agreed with writer Eric Grover that the government shouldn't be involved in allocating credit, Mooney noted that CRA considerations "had nothing to do with lenders' abandoning sound underwriting practices." Instead, "it had everything to do with producing income from the origination and securitization of loans. There weren't enough prime loans to feed the beast, and lenders increasingly went down market to keep the fees flowing," Mooney wrote. He noted the CRA explicitly does not require banks to engage in activities that are not safe and sound, and many of the participants in the subprime market were not subject to the regulation in any event.


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