How did the Government "FORCE" banks to make risky loans?

Please explain because in the "Community Reinvestment Act" it clearly states "That an institution's CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution." So it wasn't... show more Please explain because in the "Community Reinvestment Act" it clearly states

"That an institution's CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution."

So it wasn't because of the CRA because it doesn't "Force" anyone to make loans.

All CRA did was stop the banks from 'redlining" where they would deny you just because of your zip code and not on the fact if you could afford it or not. If you lived in a certain zip code (that was mostly poor and minority majority neighborhoods) they would automatically deny you.

Also approximately 50% of the subprime loans were made by independent mortgage companies that were not regulated by the CRA.

A 2008 study by Traiger & Hinckley LLP, a law firm that counsels financial institutions on CRA compliance, found that CRA regulated institutions were less likely to make subprime loans, and when they did the interest rates were lower. CRA banks were also half as likely to resell the loans.

So why how did the Government make Banks to make risky loans????

http://www.federalreserve.gov/communityd...

http://www.federalreserve.gov/newsevents...
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