In recent months numerous articles have unfairly blamed the current financial crisis on efforts to increase lower-income homeownership.  The Wall Street Journal's "Regulation Didn't Save Canada's Banks," by Marie-Josee Kravis is just the latest.

Like other articles, this one incorrectly points to the Community Reinvestment Act (CRA), the set of regulations designed to ensure that financial institutions are meeting the credit needs of both upper-income and lower-income borrowers in the communities where they accept deposits. It also suggests that CRA required banks to weaken underwriting standards and make loans to persons who could not afford to repay them.

Simply put, only about 25 percent of subprime mortgage loans were made by institutions covered by CRA. These institutions were subject to considerably more regulatory oversight than those made by unregulated mortgage companies--many of which are now out of business due to reckless, irresponsible and unsustainable lending.

According to a recent Federal Reserve report, of the comparatively small number of subprime loans made by banks subject to CRA, only about 6 percent qualified for CRA credit. If banks were indeed forced by federal regulators to loosen credit standards, that figure would have been considerably higher.

The loans made by CRA-covered institutions were also subject to considerably more regulatory oversight than those made by unregulated mortgage companies--many of which are now out of business due to reckless, irresponsible and unsustainable lending. The additional oversight provided by CRA also sets out clear penalties for banks making reckless loans--something that, to our detriment, few other regulations have offered.

The way in which we reform the banking industry in this country will be the definitive conversation for the next several years. Balanced regulation, like CRA, should be a subject of that conversation as it will undoubtedly play a role in the solution even though it clearly played little role in the problem.