This seems to be a myth or I just cannot find the evidence of such.
Repeating the myth is not an answer - in other words, only the actual language of the law constitutes a suitable answer.
Well, briefly, no. The Community Reinvestment Act of 1977, and its amendments in later years, placed certain limits on what banks were allowed to do in the way of expanding their business. Here’s the heart of it:
Other sections of the act require the agencies to take the same rating into account when evaluating applications for converting from a bank holding company to a financial holding company, or acquiring another bank, or expanding to other states, or taking advantage of federal incentives. Since banks want to do these things, they had to pursue good CRA ratings, which meant making loans in poor neighborhoods, in order to get what they wanted. Deregulation inn 1999 added fuel to the fire, as many of the newly-available expansions were contingent on various regulatory factors, the CRA rating being one. Other laws, and changes in other laws, indirectly affected the reach of the Act – for instance, in 1992 Fannie Mae and Freddie Mac were required to devote a percentage of their lending to support affordable housing. However, it was the willingness of banks to engage in questionable and/or predatory lending for the sake of getting their expansions approved – especially the issuing of low/no-money down loans, adjustable-rate mortgages, and the like – that allowed the housing bubble to get so big. It is not obvious that CRA-influenced loans have a substantially greater risk of being underwater, nor are very many subprime loans (what, 6%?) issued under CRA.
The Wikipedia articles on the CRA and the causes of the housing bubble look pretty good to me, and they CRA article has links to the Act itself and US Title 12, which codifies it.
This is one man’s brief opinion.
No.
In particular, Countrywide, one of the biggest culprits, was not a bank and thus not subject to CRA.