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No, Larry, CRA Didn’t Cause the Sub-Prime Mess

It has lately become fashionable for conservative pundits (Larry Kudlow, George Will) and disgruntled ex-bankers (Vernon Hill, for example, in his March 7 American Banker editorial) to blame the current credit crisis on the Community Reinvestment Act. This is patent nonsense. The sub-prime debacle has many causes, including greed, lack of and ineffective regulation, failures of risk assessment and management, and misplaced optimism. But CRA is not to blame.

First, the timing is all wrong. CRA was enacted in 1977, its companion disclosure statute, the Home Mortgage Disclosure Act (HMDA) in 1975. While many of us warned against bad subprime lending before the turn of the millennium, the massive breakdown of underwriting and extension of risky products far down the income scale-without bothering to even check on income-was primarily a post-2003 phenomenon. To blame a statute enacted in 1977 for something that happened 25 years later takes a fair amount of chutzpah.

It's even more outrageous because of the good CRA clearly did in between. The 1990s were the heyday of CRA enforcement-for a variety of reasons including the raft of mergers and acquisitions that followed the 1994 Riegle-Neal Interstate Banking and Branching Act, increased scrutiny of lending practices by the media and activism by housing advocacy groups and tougher enforcement by the Clinton Administration.That period saw increased home mortgage lending to lower income households and in lower income communities by the banks and thrifts covered by CRA, and a steady increase in the homeownership rate, especially for lower income and minority families. (See The Joint Center for Housing Studies). In addition, there was significant investment in affordable rental housing, community facilities and broader community economic development, directly by banks and thrifts earning investment credit under CRA or indirectly through bank investment in Community Development Financial Institutions and other community-based organizations.

New research by Ingrid Gould Ellen and Katherine O'Regan of NYUWagner, presented at a conference sponsored by the Philadelphia Federal Reserve Bank, convincingly demonstrates that property values went up dramatically in low and very low income urban census tracts during the 1990s, reversing severe declines during the prior two decades. While Ellen and O'Regan point out that this does not necessarily mean that everyone in those communities benefited, relating the improvement in home values in distressed communities to the effects of a statute designed to increase access to mortgage credit in those communities, during a period when the statute was vigorously enforced, is a reasonable connection.

Second, CRA does not either encourage or condone bad lending. Bank regulators were decrying bad subprime lending before the turn of the millennium (see Interagency Guidance on Subprime Lending), and warning the CRA-covered institutions we regulated that badly underwritten subprime products that ignored consumer protections were not acceptable. Lenders not subject to CRA did not receive similar warnings.And we also explained to those we regulated how to serve lower income communities and borrowers in a manner that was good for the borrower, good for the bank, and earned CRA credit.

For example, in October 2000, when I spoke to the National Association of Affordable Housing Lenders, a group of CRA-covered lenders, I said, "key to successful community reinvestment activity is being a responsible lender. Being responsible means making loans on responsible terms to people who can afford to pay them back, and making certain borrowers both understand the terms of the loan and have the opportunity to get the best terms available given their credit and financial position. But it also means expanding both the market for and affordability of loan products. It means working with customers to make them more bankable, helping families find the loan that is right for them, and investing in their success and yours by supporting organizations that assist you by counseling these individuals on the front and the back end of a loan."

CRA enforcement became a lower priority for bank regulators after 2001. My successor at the Office of Thrift Supervision, in fact, led an effort-eventually thwarted-to unilaterally loosen CRA regulations for institutions with more than $1 billion in assets. See 70 Fed. Reg. 10023. Nevertheless, CRA regulations were eased more generally in 2005. See 70 Fed. Reg. 44256.

The years that coincided with reduced CRA enforcement are also the years when CRA-covered entities wandered deeper into "higher priced loans," a category that includes, but is not limited to, "exploding ARMs" and other particularly pernicious kinds of loans. Thanks to the valiant efforts of late Fed Governor Ned Gramlich, starting in 2004 we have data about "higher priced loans." In that year, bank, thrifts and their subsidiaries-the entities covered by CRA-made about 37% of high cost loans. By 2006, the bank, thrift and subsidiary percentage was up to 40.9%. That a lack of interest in CRA enforcement coincided with CRA-covered entities getting into higher priced lending does not seem to me an argument for less CRA enforcement. Rather, it's an argument for better enforcement of a statute that, when well enforced, had proven its worth in helping both borrowers and communities.

Finally, it is nevertheless the case that CRA-covered lenders are not the source of the problem. One of CRA's major failings, in fact, is that it only applies to banks and thrifts. Remember all the investment banks who demanded product and then sliced and diced loans until it was impossible to understand their quality?They're not covered. Neither are the independent mortgage banks, the kinds of firms that have gone bankrupt or nearly so because of their abysmal lending practices, who regularly made about 50% of the high cost loans. Bank affiliates, another uncovered group, made about 12% of the high cost loans.

Janet Yellin, President and CEO of the Federal Reserve Bank of San Francisco recently made this point, saying "Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans, and studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households." And a recent study by Traiger & Hinckley LLP (See also the addendum).

CRA is not perfect. It doesn't cover a substantial portion of the financial services landscape. It has become complex, and the primary focus is on numbers of loans, with less attention to the quality of those loans. Asset-building depository and other services are given short shrift. And banks and thrifts have been allowed to "count" loans made by affiliates that are not subject to effective regulatory scrutiny. Governor Gramlich was right when he said that these entities-like the independent mortgage bankers-should be subject to far greater regulatory scrutiny, for many reasons. Certainly banks should not be allowed to count loans made by these affiliates for CRA purposes without such scrutiny.

But these are not reasons to repeal CRA or blame it for a mess caused primarily by those not subject to its reach during a period when even those under its umbrella were not encouraged to take it seriously. Rather, our challenge is to respond to the ongoing credit crisis in part by modernizing CRA, expanding its reach and making it even more effective than it was in the 1990s.



Ellen - this commentary is right on the money. As usual your insight is astute.

Are you kidding? Bear would

Are you kidding? Bear would have never been able to create the first securitization of subprime paper in 1997 if it had not been for the revisions to the CRA that allowed it. That was the nexus of the problem. Sure other stimuli contributed to exacerbate the problem but to obscure the affect of legislation that served a single goal at the great expense of systemic protection we learn nothing.

what are you smoking? what

what are you smoking? what proof, economic study do you have? and please don't quote limbaugh. that is not an economic study. this is:

Bear did, and CRA did not have anything to do with it.

CRA enforcement changed under the Financial Modernization Act, which also allowed the securitization of loans. However, check the above links carefully. Especially compare the Treasury Department FMA CRA impact baseline report:

In 1993 CRA covered institutions made 65% of all LMI (Low and Moderate Income) loans in the country. In 1998 CRA institutes made 63% of LMI loans. You may remember, no subprime leanding crisis during those years. By 2006, CRA institutions made only 22.7% of LMI loans. Also in 2006, CRA institutions only made 11.7% of all LMI and high cost loans (subprime loans). Guess what we had in 2006? That's right a subprime mortgage crisis. As noted in both the above studies. CRA institutions are much more likely to make loans to credit worthy borrowers and that the growth in high cost loans (subprime) loans is almost exclusively due to non-CRA institutions.

Scroll down to the graph

Scroll down to the graph named "Primed for Disaster" and look what happens in the mid-90's. It was used in reference of bank deregulation, but it is very pertinent here because sub-prime lending began before the 1999 bank deregulation. Almost nobody gave sub-prime loans until shortly after Clinton's regulatory changes. You quote 65% for 1993, but 65% of nothing is still nothing. You'll notice too that the largest spikes percentage-wise were not after Bush announced the loosening of regulatory requirements in 2004 or Gramm's inclusion of protections in the 1999 deregulation which took effect in 2000. In fact the sub-prime lending rate leveled off or went down with the protections. It's not like somebody just thought of the sub-prime idea in the mid-90's. It had been around for centuries. Nobody did it though, because nobody was effectively forced to until the mid-90's.

You (as well as Traiger Law) also seem to completely ignore the fact that while CRA-covered institutions were not making (originating) a high percentage of these loans by the late 2000's, they are effectively buying them from non-CRA-covered mortgage companies (or community groups like Acorn) to satisfy their requirement for CRA credits. This creates a market for the non-CRA-covered companies to sell sub-primes to the covered institutions and encourages more sub-prime loan origination. This is noted in Section II Sub-section B of the following: The idea that requiring lending institutions to lend responsibly, but they had better lend or else is like telling your 15 year old boy to go mow the lawn, but you had better not get dirty. It's a fallacious paradigm.

You also seem to completely downplay the regulatory changes in support of the CRA that allowed the securitization of loans. Institutions like Fannie Mae and Freddie Mac were directed by the Clinton administration to hold more and more loans with less requirement for capital reserves to back them up. As we all know, Fannie and Freddie were among the first to hit the bricks and they bought and owned much of the CRA debt.

I know you didn't address this, but the authors use of the Fed study on profitability, a nearly 10 year old study (using 1999 data) that was compiled barely after sub-primes really hit the market, much less had a chance to default, is questionable if not completely irrelevant in 2008. There had been no upward adjustment of interest rates, no time for bubble creating or bursting, nothing like that. I suspect that the same study done today would have vastly different results.

The article also fails to realize that many of these sub-prime loans were not just ARMS, but 5 to 10-year interest only loans. This type of loan was introduced in 2000 and by 2005 were close to 30% of the market. These loans would have started to mature to interest+ loans, let's see...right about a year or two ago. I've seen many say that the timing is off since the CRA took effect over 30 years ago. These people almost invariably gloss over the regulatory changes made in the 90's. Those changes are the crux of the matter.

Now, having said that, I think the CRA was noble and well-intentioned and does have a place in today's society. Not in it's current form though. It has to focus on incrementally building credit for those it serves to the point where they have sufficient credit worthiness to make large loans (like home loans) a viable option (in the prime market). After all of the sub-prime lending it has spawned and the pending financial catastrophe that it is causing the economy as a whole, it still has only raised black home ownership from 42% in 1970 to 47.2% more than 37 years later. Of course in 2009 and 2010 that might be lower due to all of the bad mortgages, foreclosures, and bankruptcies that are on the books. Due to the injection of stricter requirements by the Clinton administration and refusal of Congress in 2003 and 2005 to supervise Fannie and Freddie in more stringent fashion, the CRA is now hurting the people it was supposed to protect.

The 1970's CRA did not cause this. The 1990's CRA, while not responsible for the whole mess, is definitely a large part and the core of it.

Nice. Nice how it is proven

Nice. Nice how it is proven that loans given with full CRA standards were not the ones that defaulted as much as those given by shady mortgage corporations that did not follow CRA standards.

I like how you try to sound as though you know. Nice try.

The fact that the crisis

The fact that the crisis occurred five or six years later illustrates the opposite of the point you make. The subprime crisis didn't happen as a result of bad loans that were originated in 2006. They came as a result of cumulative bad loans originated years before, that had pushed the aggregate prices higher and since the price rise was unsustainable, the underlying assets of the loans (the property) was devalued to a more sustainable level based on sustainable demand. This is what caused the subprime crisis: derivative implosion. One thing that led to this implosion was an unsustainable buying frenzy. One thing that led to this buying frenzy was easy money policy at the Fed, and another thing that led to it was easy qualification made possible by the combination of the CRA and the implicit gov't guarantee of Fannie/Freddie.

It takes a few years to correct a market distorted by poorly conceived legislation. Just look at the rise in home prices before 77 and after 77. If you create more demand (i.e. expanding the market to buyers who were previously unable to buy because of bad credit/low income/etc.), you see less supply. If there is less supply, people step in to increase that supply to meet the demand(i.e. building/flipping houses). This will eventually equalize, as is obvious to anyone who has the most basic understanding of economics. If, however, that increased demand is unsustainable because it is coming from people who cannot pay (it was) then as soon as they start defaulting, the market will implode.

To say the CRA caused the subprime crisis is only incorrect because there were other factors. To say the the CRA was bad legislation that helped us down the path we were on is totally correct. Subsidized/affordable housing legislation of any kind increases demand and pushes prices up, which makes it even harder to purchase for people who were having a hard time already. This kind of legislation is intervening and meddlesome, and is enacted by people who just don't get it.

Exactly Fred!

Thanks Mike P.
Maybe some of you haven't owned a home yet and have no idea what's going on out there. When you try and get a loan and your told that if you were black and made a little less money then you get a loan easier(which IS what the CRA did..I don't care what you read it does happen) There is also literature on it being targeted towards minorities.
So even besides that the fact that the gvt. MANDATES it is even worse. Banks were given CRA credit scores. That is completely unacceptable in a free market. It's a quota system for housing and IT FAILED. Yes deregulation doesn't help when you have an open door for getting the money that is never going to be paid back but both parties were involved in Deregulation but the Dem's Clinton and Carter were involved in the CRA. Obama has people who head his campaign who are directly involved in the Fannie-Freddie problem.
You people better watch out who you suck up to. I don't trust either party...but I know what I'm voting against. It's never been clearer. Good Luck.

Not true

I have personally been involved in "mystery shopping" banks for CRA purposes, and have never seen or heard of "maybe if you were black and made less money". In FACT, in analyzing CRA performance, what one does is find pairs of prospective borrowers as ALIKE as possible, and see if they are treated differently. Limbaugh may spout stuff like this, but in fact, it doesn't happen.

Facts are that CRA loans written by covered institutions clearly outperform subprime loans created by non-covered institutions by orders of magnitude. Facts are that greed and a thirty year bi-partisan agreement to lay off regulating the financial services industry effectively, and to allow the regulatory disparities between different sectors of the financial services market, created this. It is complicated. Lots of contributing factors, and you actually have to THINK instead of just finding a way to blame whatever party you don't like--I know this is difficult in America today (thinking, that is), but there is not a simple answer.

I've worked in commercial banking, investment banking, and several employers have had mortgage operations--I've seen CRA compliance at work and I have seen rampant greed where there was no CRA concern. I've seen stupidity in both arenas.

Let's stop trying to find the simple, kindergarten level answer, and worry about A) fixing the mess and B) making financial services regulation more coherent so this can't happen again.

Both Fred and Steven are Dead Wrong

I have become accustomed to seeing factless comments here, but those two guys take the brioche!

Stick to calling in to AM radio shows if you are looking for other witless souls to confirm your highly erroneous prejudices.

I'm wondering if you have

I'm wondering if you have any facts to support your assertion that the previous comments are factless.

I'd happily consider the relevancy of your argument if you would kindly provide one.

fred and steven dead wrong? sorry pal

I asked a couple of people that do mortgages and they did say that there were quotas, I filled out a questionnaire on wells fargos website 2 weeks ago and there was a separate box to checkoff if your Hispanic, which was separate from the checkboxes for the other nationalities your nationality shouldn't matter, just your income, assets, and credit score, go check it out yourself, talk to any friends that are in the mortgage business for at least 6 years that will be honest with you and ask them, I'm a realtor, and I saw lenders handing out money to people that I kept asking myself how these people could even get a loan.
Most of this foreclosure mess is because of congress forcing banks to hand out money to people that shouldn't have gotten it. go to and do a search for 2004 fannie mae congressional hearings, it's all on c-span, right undeniably in front of your eyes, this problem could have totally been avoided if the democrats in the banking and finance committee allowed regulations on fanny mae and freddie mac to be changed, instead they stopped the vote from going out on the floor with their veto.


The whole youtube thing you speak of is like watching some Michael Moore crap.

You some of it is true but it goes so fast the important parts are missing.

You are so completely 100%

You are so completely 100% wrong! The box you check off -- whether you're black/hispanic/white is not CRA related!! It's the HMDA box, as those of us in the biz know, and it's to ensure we are not redlining in our day-to-day operations. If, at the end of a 2 yr period, for example, and you get audited, they look to see if you're only doing loans to your white suburban friends. There's no such thing as quotas, there's no such thing as being sure you meet your CRA requirements. You simply are showing that you are doing business with all sectors of the local economy you happen to be in. Wow, your ignorance is appalling, and you're in this just to blame the Dems, nothing else. Quit listening to Elrushbo and get yourself educated!


All of this is mere speculation without testing various contributing factors in a sound econometric model. So far as I know no one has yet to endeavor on such a massive task. However, I surmise that some of the likely culprits would include HUD requirements on Freddie and Fannie to purchase subprime loans, NINJA loans, the growth of Mortgage-backed securities, the FED’s artificially low interest rates, increased power and influence of community groups like ACORN and NACA, proliferation of subprime originators, the compromise Gramm-Leach-Biley Act of 1999, creation of credit default swaps and many other factors including the CRA and its many revisions through the years.

I suspect (and, yes, this is speculation) that the CRA got the ball rolling down the hill and picked up all the accretions mentioned above to create the massive financial problem we face today. This CRA stone picked up a lot of moss on it way down. I would guess that the CRA is responsible for about a third of the damage, but the whole problem would not have started without its passage in 1977.


This article lies by omission. While the CRA may date back to 1977, it was the 1999 passage of the Gramm-Leach-Bliley Act that expanded CRA into the monster that spawned the subprime crisis. And THAT timing fits the historical record quite well, actually.

In other words, "It's socialism, stupid!"

Do you mean "Trickle Down" Socialism?

If it’s “socialism” than how do you explain the effects the Wall street crisis had on countries like the Socialist Republic of China that would have been much better off had the failure never happened?

Actually, I’d agree with that socialism accusation to the extent that “socialism” equates to “corporate welfare” because that’s what Gramm-Leach-Billey was. The act was aimed at deregulating the banking industry so that commercial/investment banking and insurance companies could consolidate. It was the interests of corporate lobbyists that drove the act, not the interests of low income borrowers and their advocates .

In other words, the act expanded the FINANCIAL SERVICES INDUSTRY into the monster that spawned the subprime crisis.

It’s deregulation stupid (and Greed)!

CRA not responsible? In a pig's eye.

Ten years ago, Andrew Cuomo, Clinton's Housing & Ubran development secretary, made an announcement of a $2.1 BILLION "agreement" against Citi Bank for not giving loans to people who cannot afford them. Hear Cuomo agree that this suit forces the bank to give loans to people who would not qualify for them if the loans were based on good credit ratings. He also agrees that the CRA loans will INCREASE the risk of losses the bank will be exposed to.

Now the other 80% of the banks who weren't "under the law" could see the writing on the wall - give the loans or risk getting sued by either the government or ACORN.

So, claiming that the CRA didn't cause the meltdown because it only applied to 20% of the banks is disingenuous at best, deliberate lies at worse.

IF you were the CEO of a small bank in middletown, USA, and you saw ACORN harassing the CEO of another small bank, picketing their house, harassing their family and making harassing phone calls, and then the Feds SUE a branch of the BIG BANK for not complying with CRA and ancillary laws, what would you do, especially since you were told that the FHA, Fannie May and Freddit Mac would guarantee the loans? Some choice: law suits and fines, or profit. A no brainer.

It's like the current interest rate debacle. To generate taxable income, Delaware passed laws allowing businesses out of state to form corporations in state, and also passed laws allowing interest rates on credit cards and loans to climb to levels the other 49 states had declared as exorbitant and illegal usury. Not to be outdone, and in need of tax revenues, South Dakota followed suit. Pretty soon other states were noticing that their tax revenues were declining as a result, so they soon relaxed their laws on usury. Now we have "check cashing" stores in most states that charge 452% interest rates for those who cannot afford to pay the credit card companies 32% rate. And, to make things worse, the credit card companies have modified their terms so egregiously that hair triggers, which the companies can set off themselves, are now in place, guaranteeing that the "low introductory rate" of 5% or 3% or even 0% can soon be jacked up to 15%, then 18%, then 32%.

Were the states "being greedy" or just trying to stay alive?

Shall we discuss the State Lotteries, which are nothing less than taxes on the poor, and in which the state and federal governments are 66% partners?



CRA and the Meltdown

I presume up front that I am not as astute a student of the complexities of high finance BUT I CAN TELL YA THIS - there IS a linkage between spending our way into a deep hole and our fiscal health and I CAN TELL YA THIS - you will NEVER convince me that after the REPUBLICAN PARTY HAD COMPLETE CONTROL OF THE WHITE HOUSE, THE SENATE, AND THE CONGRESS FOR THE BETTER PART OF A DECADE, ALL THREE DAMN HOUSES OF GOVERNMENT, it takes a hellova lot of chutzpah to try and blame one little gay fellow named Barney who talks like Elmer Fudd for bringing down the entire economy of the USA, possibley bringing it down as we know it forever. HERE IS A GIFT FROM ONE WHO CARES - IF YOU BELIEVE THE LIMBAUGH-ESQUE THEORY ABOUT BARNEY FRANK AND "MINORITY LENDING" you should be fitted for a drool bucket. In fact maybe "drool buckets" would make a good business for the next decade. "Sub Prime" is just Republican buzz word speak for "damn minorities" but they have so little to do with our current economy that their involvment is negligable and I guaruntee ya it is not the sub prime borrower who made off with our trillions!

Which decade are you talking

Which decade are you talking about? and why mention the fact that Barney Frank is gay or that he talks funny? Sounds like maybe you're trying to assert that he is getting picked on unfairly because of his sexual orientation or because he talks funny.

That's ridiculous. He's getting "picked on" because he was the head of the finance committee and announced in 2006 that "going forward, the fundamentals of Fannie Mae are solid." He was essentially in charge of making sure what they were doing was on the level, and he failed at getting the truth out at the same time he accepted very generous campaign contributions from fannie and freddie.

He does talk funny though, I'll give you that ;)

Sub Prime Mess

Wow great site - Kudos! The SP toxic waste or truth of the matter is only a perspective and calculated educated guess (I as an veteren insider who sat it out say that for legal reasons). Not one law suit (sub Prime investors or class of borrowers) has hit the target. Not one web page or media source either. The world is coming close to disclovery (cause) . I almost feel like breaking this one open and why here - who knows?

The few who do know are tight lipped and I dont get it. But I should not talk. Put it this way...

"Riddle me this; What does a Pass Though investment in a REIT contingent on and what is characteristic of a preferred stock? Who is at the bottom of the food change but has the net worth? And what is the underlying cause for the orgination volume over the years? What does a monstorous bail out and the failure of 2 of the largets banks and Lehamn tell us about the crime scene." Advice to counsel -the judges know and so should you. If you dont you may want to consider staying away and out of the court room - Its that serious! Otherwise You have no shot at guessing and prevailing in a suit. msoliman

Legislation over interest

Legislation over interest rate cap is where the House Financial Institutions and Insurance Committee are focusing right now. Usury laws are in many cases quite necessary, and ensure that lenders and borrowers are both honest, but in this case, it isn't necessary. You get all your terms disclosed upfront and transparently when you get a payday loan, and studies show that an overwhelming majority of customers pay their loans back on time.

Who got rich?

CEOs were paid big bucks to gamble. If the gamble paid off, they got big bonuses. If the gamble did not pay off, they were fired with huge severance package. That's a win-win.

Those poor bankers, being forced to make bad loans (and accept golden parachutes). I'm no fan of big government but blaming Acorn and the CRA for the demise of investment banking, AIG, and recessions throughout the entire planet is a stretch.

First, some good news. The

First, some good news. The CRA "prescribed rate" for the quarter beginning April 1, 2009, has been pegged at one per cent. This is the lowest rate ever.

If you know what that the prescribed rate is used for, then you may already know how to take advantage of it. If you don't, then stay tuned to this spot over the next few weeks, as we will talk about some of the opportunities this presents.

The new interest rate charged by CRA on unpaid balances and instalments is five per cent, compounded daily. That will be charged to you on any taxes or CPP premiums that are unpaid as of April 30, and on late or unpaid instalments or other overdue payments.

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Classic rhetoric of conservative reaction

This is classic rhetoric of conservative reaction. (For fans of welfare policy, it is Charles Murray meets the mortgage mess.) Most analysts see the sub-prime crisis as a market failure. Believing the bubble would never pop, lenders approved risky adjustable-rate mortgages, often without considering whether borrowers could afford them; families took on those loans; investors bought them in securitized form; and, all the while, regulators sat on their hands.

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Are you kiddin' me? Is the author of this story on drugs?

It's basic Logic 101: if you loan money to people who don't have the means to pay you back, you will not get paid.

The government forced banks to make loans to minorities who (for good reason!) would otherwise have not been approved. SURPRISE! They did not pay the loans back. As a result, the banks that were forced to make the loans were stuck with bad portfolios and we find ourselves exactly where we are now.

For this author to act "surprised" is truly annoying. No one can be that foolhardy!

Legislation over interest

Legislation over interest rate cap is where the House Financial Institutions and Insurance Committee are focusing right now. Usury laws are in many cases quite necessary, and ensure that lenders and borrowers are both honest, but in this case, it isn't necessary. You get all your terms disclosed upfront and transparently when you get a fast cash loan, and studies show that an overwhelming majority of customers pay their loans back on time.