it was a regulation

if that was the case, many regulations wouldn't be enforced today

The state does not understand these risks

And even among institutions that were affected by the law and were obligated to issue these subprime mortgages, they took up many more subprime loans than they would have been forced to under the law.

Because they were rated

by regulators

There was alot behind this

So did investors not affected by the law, who acquired even more than they ever would have needed to even if they had been subjected to the regulations.

CRA ratings

There are three ways the CRA pushed these loans:
1. The Creation Of Artificial Demand For Low-Income Mortgages.
2. Threat of regulation
3. Distorted the mortgage market

Many smaller mortgage service companies hoped to be acquired by larger banks. Increasing their CRA lending made them more attractive take-over targets

But those points don’t really do a good job of explaining the huge boom in mortgage-backed securities, especially subprime ones, in the lead-up to the crisis that significantly outstripped the government-mandated demand for them.

Yes the boom was created by the CRA

which ended in a bust

as always

All the malinvestments of the economy were cleared in the bust

CRA required lax lending standards that spread to the rest of the mortgage market. That fueled the mortgage boom and bust.

Yet you agree that the majority of the boom was at least fueled by private, non-obligatory investment not influenced directly by government intervention?

they were influecned

big time

And that’s why I also argue for better lending standards.

If this regulation did NOT exist, this crisis would not have happened

Visitor well thats the case, banks would not have made these loans if it were not for the regulation

They already have good lending standards

I doubt it. MBSs were a new technology that would have made a splash in the investment field anyway, regardless of whether government intervention furthered its adoption.

I wouldn't

banks and investment firms would never have made these loans

100%

While banks go for profit, like any company

Yet they did make them even when they had no further obligation to do so

they have to make sensible decisions to make the profit

Because of the CRA

The CRA didn’t force them to take up anywhere near the level of dubious debt they did

Read above

CRA ratings existed

they were hard pressed by regulators aswell

It contributed to demand, sure, but the government building roads doesn’t create booms and busts in the pavement sector

The state effectively distorted the mortgage market due to it's central planning

Thats not a good comparison

What kind of comparison would you want instead?

None