I've got a post over at the Enterprise blog today about awards given by compliance agents for the Community Reinvestment Act. In several instances the awards went to firms who have since failed. Most notably 2003 winner Washington Mutual produced the largest bank failure in American history.
This morinng I attended a Congressional subcommittee hearing where the many benefits of CRA were extolled. CRA, according Chairman Gutierrez (D-IL), several expert witnesses, and most members of the majority, had no role in the financial crisis. I don't argue about the role that CRA played other than to say that CRA regulators were just as blind as many other private and government actors to the coming financial crisis during the boom years. Just as private players congratulated their "quants" for banishing risk and creating complex deviates with little thought to the long-term consequences, CRA officials gave the improper of government endorsement to "innovate" programs only to have to watch the managing firms falter.