SFY - Policy Matters: History Of Bank Lending To Deposits Sub-Prime Lending And Dodd Frank
The history of bank lending versus deposits shows a gradual increase from under 70% (bank reserves 30%+) to a 1990 peak of 89%, which then pulled back to ~80% with the scare of the financial crash in 1987. As the next cycle began, Congress passed the Community Reinvestment Act 1995 to force banks to lend to Sub-prime borrowers. The goal was to reduce poverty through advancing the percentage of home ownership to those with poor credit histories. The underwriting rules were eased several times, resulting in more than 98% loan/deposit ratio coinciding with the peak