[bd_at_rivenhill]

Actually, the CRA has very vague requirements, which led it to be used as a tool in a political process whereby community activists worked to block expansion of banks which did not meet their criteria. When stuck between the requirement that an institution's CRA activities should be undertaken in a safe and sound manner and the vocal opposition of politically powerful groups, the regulators did the logical thing in their situation and avoided bad publicity by relaxing standards. In addition, the law was changed to require Fannie and Freddie to do more business in low to moderate income areas in the early 2000s, which defacto reduced their standards and allowed a great deal of crappy subprime paper to be stamped with an implicit (later explicit) government guarantee. If it weren't for this last part, a lot of those loans could not have been securitized. The flood of low quality mortgages did not come as a result of regulatory laxity but of legislative intent, and that is the story that is not being told.