In both cases, locals insisted that the government is to blame for the subprime mortgage meltdown because it instituted regulations that, they allege, forced mortgage lenders to make risky loans. Too much regulation is to blame, they say, not too little. The regulations to which this theory's adherents refer are contained in the 1977 Community Reinvestment Act (CRA).

First, Libertarian State Assembly candidate Mark Hinkle touted this theory in his endorsement interview with the Morgan Hill Times editorial board. Then Gilroy Dispatch columnist Cynthia Walker made many similar claims in a recent column.

When you start with ideologies like "all liberal ideas are bad" or "all deregulation is good," you land in a tough spot when reality contradicts them, as the deregulation-fueled subprime mortgage meltdown is currently doing for many on the conservative end of the political spectrum. That's why Hinkle and Walker are hoping that you'll believe that the successful, 31-year-old CRA is to blame for a brand-new financial crisis happening in a different century than the one in which the CRA was enacted. Don't buy it. This distortion of reality requires that they completely ignore history:

n "In late 2004, the Bush administration announced plans to sharply weaken CRA regulations, pulling small and mid-sized banks out from under the law's toughest standards. Yet sub-prime lending continued, and even intensified - at the very time when activity under CRA had slowed and the law had weakened." (Robert Gordon, The American Prospect, April 7, 2008)

n "CRA Banks were substantially less likely than other lenders to make the kinds of risky home purchase loans that helped fuel the foreclosure crisis. Specifically, our analysis shows that: (1) CRA Banks were significantly less likely than other lenders to make a high cost loan; (2) The average APR on high cost loans originated by CRA Banks was appreciably lower than the average APR on high cost loans originated by other lenders; (3) CRA Banks were more than twice as likely as other lenders to retain originated loans in their portfolio; and (4) Foreclosure rates were lower in (metropolitan statistical areas) with greater concentrations of bank branches." (Study by Traiger and Hinckley, fair lending law firm, January 2008)

n "Most of the loans made ... under the CRA have not been higher-priced loans, and ... the CRA has increased the volume of responsible lending to low- and moderate-income households." (Janet Yellen, San Francisco Federal Reserve president and CEO, March 2008 speech to National Interagency Community Reinvestment Conference)

n "The recent national rise in delinquencies and foreclosures has been sudden and substantial. ... Most of the problems have been concentrated in the subprime market, and in particular, among subprime adjustable-rate mortgages. ... Many subprime loans included additional risk factors, such as a lack of full documentation, high combined loan-to-values, and high debt-to-income ratios." (Ibid.)

n "Perhaps the most significant factor driving the current rise in delinquency and foreclosures is declining house values. ... Downward changes in house prices are strongly associated with subprime delinquency 'hotspots.' Of particular concern, however, is how relaxed underwriting standards and abusive lending practices have increased the risk of delinquency and foreclosure." (Ibid.)

n "Critics of CRA assert that it leads to unprofitable lending. But the weight of evidence suggests otherwise. In a Federal Reserve Board survey of CRA-covered institutions, most responded that CRA lending was profitable or marginally profitable, and not overly risky." (Michael Barr, University of Michigan law professor, February 2008 testimony before a U.S. House of Representatives committee)

What's to blame for the current mortgage meltdown? Certainly not the Community Reinvestment Act. To borrow a term coined by former Gilroy Mayor Tom Springer, blaming the CRA is bull-dickey. I seriously question the credibility and agenda of anyone who tries to pass that bull-dickey off as reality.

The real culprit is excessive deregulation of the sort that John McCain has spent his 26-year Senate career championing; deregulation of the sort that many of the scores of lobbyists running McCain's campaign encouraged; deregulation of the sort that Freddie Mac and Fannie Mae paid lobbyist Rick Davis, now McCain's campaign manager, nearly $2 million to promote to McCain and others legislators.

Blame deregulation that enabled "maverick" lending practices and facilitated reckless greed for the subprime mortgage meltdown. Anyone who tries to tell you otherwise is confused, lying or an ideologue. Or all three.

Lisa Pampuch Lisa Pampuch is a technical editor and a member of the newspaper’s editorial board. She lives in Morgan Hill with her husband and two children. You can reach her at lisapampuch@iname.com