under discussion today. moreover, an analysis of foreclosure rates in that study found that loans originated by cracovered lenders were significantly less likely to be in foreclosure than those originated by independent mortgage companies. 5 clearly, claims that cra caused the subprime crisis are not supported by the facts. the question of the moment, then, is not whether the current crisis was caused by the cra, but what can be done to make cra a more effective regulatory incentive going forward as we face an unprecedented set of community needs in the wake of the current foreclosure crisis and the resulting economic slowdown. lower - income neighborhoods that were once stable thanks to the efforts of community development practitioners and their banking partners now suffer from the negative effects of high foreclosure rates, including increased numbers of vacant and abandoned property, a loss of equity in their own homes, and higher rates of crime and arson. infrastructure in these communities is eroding : retailers, service providers, and other contributors to the economic health of these neighborhoods are departing. communities with lower levels of personal and neighborhood assets, including many minority communities targeted for higher - priced subprime mortgages, have been particularly hard hit. 6 as credit has tightened, less capital is available for these communities. the pool of loan and investment capital is shrinking at the same time that philanthropic dollars are challenged by elizabeth laderman and carolina reid ( 2009 ). “ cra lending during the subprime meltdown ”, revisiting the cra : perspectives on the future of the community reinvestment act, pp. 115 - 133. lower - income and minority communities were targeted for higher - priced subprime mortgages and, as a result, have experienced high rates of foreclosures. an analysis of 2005 lending indicates that 40 percent of lending in minority communities ( those where more than half of the population was minority ) were higher - cost subprime loans, compared with 23 percent of loans made elsewhere. similar discrepancies were found in areas where the median income was below 80 percent of the average median income. lei ding, janneke ratcliffe, roberto quericia, and michael stegman ( spring 2008 ), “ neighborhood patterns of high cost lending : the case of atlanta ”, journal of affordable housing & community development law, pp. 193 - 217. investment losses. to make matters even more challenging, state and local governments face extraordinary budget deficits

the most effective feature of the law – its flexibility. any new regulatory structure should also be clear about the problem we are trying to solve, it should determine who is in the best position to solve the problem, and it should be transparent and designed to ensure that community benefit is maximized without placing excessive regulatory burden on financial institutions. if we follow these principles, i am sure that, together, we can determine the most effective way to improve upon a regulation that has had demonstrated success in making credit available to low - and moderate - income communities, and we can further determine the most effective way to strengthen its role as we meet the challenges ahead.