Last week, we noted the National Review's editorial blaming the mortgage crisis on the Community Reinvestment Act (CRA), a bill passed in 1977 that demands banks lend throughout the communities they serve. Searching for a way to abrogate themselves of blame for cheering on deregulation and ignoring the housing bubble, a number of syndicated conservative pundits have latched on to this meme. According to Mona Charen -- whose column appears in The Southern -- the Democratic-backed CRA "forced banks to serve their 'whole communities' and required them to offer loans to people who were not credit worthy." In a column that appeared last week in the State Journal-Register, Charles Krauthammer piled on, writing that the CRA "led to tremendous pressure to extend mortgages to people who were borrowing over their heads."  Meanwhile, slews of local conservative bloggers have linked to this rockin' YouTube video that holds up the CRA as the root cause of the meltdown.

Yet when held up to serious scrutiny, it's clear the CRA had virtually nothing to do with the current economic crisis. Robert Gordon's April piece in The American Prospect is the best rebuttal to date, proving unequivocally that lenders approved bad loans to make cash, not comply with the CRA.

The timing of the bill is important. Enacted originally in 1977, Gordon writes that "new CRA regulations and a wave of mergers led to a flurry of CRA activity" in the mid-1990s. But as noted by the New America Foundation's Ellen Seidman, that activity "largely came to an end by 2001." And three years later, the Bush administration weakened CRA regulations by allowing small and mid-sized banks to opt out of the law's toughest standards. "Yet sub-prime lending continued, and even intensified," Gordon says, "at the very time when activity under CRA had slowed and the law had weakened."

As it turns out, most lenders that peddled subprime mortgages weren't even subject to CRA regulations, either:

As the University of Michigan's Michael Barr points out, half of sub-prime loans came from those mortgage companies beyond the reach of CRA. A further 25 to 30 percent came from bank subsidiaries and affiliates, which come under CRA to varying degrees but not as fully as banks themselves. (With affiliates, banks can choose whether to count the loans.) Perhaps one in four sub-prime loans were made by the institutions fully governed by CRA.

What's even more damning is that banks that were subject to CRA regulations engaged in less, not more, of the most dangerous lending. Janet Yellen, president of the San Francisco Federal Reserve, tells Gordon that independent mortgage companies -- which are not covered by CRA -- made high-priced loans at more than twice the rate of the banks and thrifts. "CRA," Yellen says, "has increased the volume of responsible lending to low- and moderate-income households."

Of course, even if one thinks Gordon's case is faulty, blaming the financial instability on the bad debt itself shows a grave naivete about the fundamental dynamics of the meltdown. Adam Serwer has more:

But even if 100 percent of bad debt had been produced by people of color, the reason for the financial collapse is that debt was chopped up and marketed as mortgage-backed securities to financial institutions all over the world. If the debt hadn't been sold, making many people very rich, the bad debt wouldn't have been integrated into the rest of the financial system and it would have just led to the collapse of the original institutions providing mortgages. In other words, it wasn't the debt itself; it was the very lucrative selling of the debt that got us where we are today.

It's the slicing and dicing of subprime mortgages -- enabled by conservative deregulation -- that's led to our financial situation. Blaming a successful law that helped atone for years of intentional redlining and structural impediments to capital is not only revisionist, but pretty shameless to boot.