The New Economics Foundation, a thinktank, has called for the government to adopt a US-style community reinvestment act, which would force the banks to offer services to poor communities in return for the capital injections they have received from the taxpayer.
Now I don\’t go as far as some, insisting that the Community Reinvestment Act was the sole and only cause of the sub prime mortgage fiasco. But I do think it was at least part of it. Banks had to, by law, lend to those who would not normally be considered credit worthy. They had to, in order to keep their banking licences, offer sub prime mortgages.
So the nef proposal is that in order to clean up our banking system after the mess of the sub prime mortgages we should deliberately insist that the banks must offer sub prime mortgages?
Not all that sensible really. But par for the course considering the source.