It is currently 23 Sep 2020, 02:51
My Tests

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

In 1977, the Community Reinvestment Act (CRA) was passed for

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:
Founder
Founder
User avatar
Joined: 18 Apr 2015
Posts: 13344
Followers: 288

Kudos [?]: 3381 [0], given: 12176

CAT Tests
QOTD #5 - In 1977, the Community Reinvestment Act (CRA) was [#permalink] New post 18 May 2016, 06:24
Expert's post
00:00

Question Stats:

58% (02:49) correct 41% (03:10) wrong based on 24 sessions
In 1977, the Community Reinvestment Act (CRA) was passed for the purpose of reducing discriminatory credit practices in low-income neighborhoods. The act required Federal financing supervisory agencies to use their authority to encourage lending institutions to meet the credit needs of all borrowers in their communities. The CRA had little impact until 1993, when the Department of Housing and Urban Development (HUD) initiated legal proceedings against lenders who declined too many applications from minority borrowers. Some argue that, while providing equal access to credit is an important aim, pressure on lenders from HUD led to practices that later caused those same lenders to be assailed as “predatory.” In Housing Boom and Bust, economist Thomas Sowell wrote that the CRA, far from being as benign as it appeared, was based on a flawed assumption: that government officials were qualified to tell banks how to lend the money entrusted to them by depositors and investors.
Consider each of the answer choices separately and indicate all that apply.

1. It can be inferred from the passage that

  • the CRA was perceived by some as seemingly innocuous
  • HUD had the ability to affect banking practices
  • Thomas Sowell had asserted that a certain level of expertise is required to direct banks’ lending activities

[Reveal] Spoiler: OA
A,B and C

[Reveal] Spoiler: OE
Sowell wrote that the CRA was “far from being as benign as it appeared.” Thus, the CRA “appeared” benign, or “innocuous,” at least to some. The passage states that HUD exerted pressure on lenders, which led to practices that later caused those same lenders to be assailed as “predatory.” Thus, HUD had the ability to affect banking practices. Finally, Sowell argued that the idea “that government officials were qualified to tell banks how to lend” was a “flawed assumption.” If Sowell believed that the government officials were not “qualified” to advise the banks, it follows that some minimum level of expertise is necessary in order to be qualified to do so.


2. Which of the following can be inferred about discriminatory credit practices?

  • They are more common in middle-income neighborhoods than in high-income neighborhoods.
  • Legislators who voted for the CRA did so because they were opposed to such practices.
  • Critics allege that attempts to combat such practices can have unintended consequences.

[Reveal] Spoiler: OA
C
[Reveal] Spoiler: OE
The passage states that discriminatory credit practices existed in low-income neighborhoods. Do not assume that there is a linear relationship wherein such practices occur most in low-income neighborhoods, less in middle-income neighborhoods, and least in high-income neighborhoods. Maybe such practices exist only in low-income neighborhoods. The first choice is out of scope. The second choice is also out of scope— you have no way to know what legislators were thinking or feeling when they voted for the CRA. The passage does provide good proof for the third statement— since some argue that “pressure on lenders from HUD led to practices that later caused those same lenders to be assailed as ‘predatory,’” you can safely conclude that some critics think that attempts to combat discriminatory credit practices (passing the CRA and enforcing it through HUD) can have unintended consequences— in this case, replacing a lack of lending with predatory lending.


_________________

Need Practice? 20 Free GRE Quant Tests available for free with 20 Kudos
GRE Prep Club Members of the Month: Each member of the month will get three months free access of GRE Prep Club tests.

1 KUDOS received
Manager
Manager
Joined: 12 Jan 2016
Posts: 142
Followers: 1

Kudos [?]: 79 [1] , given: 17

Re: QOTD #5 - In 1977, the Community Reinvestment Act (CRA) was [#permalink] New post 25 May 2016, 03:49
1
This post received
KUDOS
1)A,B,C
2)C
2 KUDOS received
Manager
Manager
Joined: 12 Jan 2016
Posts: 142
Followers: 1

Kudos [?]: 79 [2] , given: 17

Re: QOTD #5 - In 1977, the Community Reinvestment Act (CRA) was [#permalink] New post 25 May 2016, 03:50
2
This post received
KUDOS
QAs pls?
Manager
Manager
User avatar
Joined: 26 Jun 2017
Posts: 102
Followers: 1

Kudos [?]: 46 [0], given: 38

Re: QOTD #5 - In 1977, the Community Reinvestment Act (CRA) was [#permalink] New post 15 Aug 2017, 10:21
But,the 2nd answer (for the first question) says that "HUD had the ability to affect banking practices," the passage does not mention HUD's ability on banking system. The passage refers to CRA as having an impact on banking practices. Therefore, we can not assume that specifically HUD did that. Perhaps, another department affected the banking system. The passage points out that HUD had an impact on leaders though.
_________________

What you think, you become.

Founder
Founder
User avatar
Joined: 18 Apr 2015
Posts: 13344
Followers: 288

Kudos [?]: 3381 [0], given: 12176

CAT Tests
Re: QOTD #5 - In 1977, the Community Reinvestment Act (CRA) was [#permalink] New post 16 Aug 2017, 03:02
Expert's post
boxing506 wrote:
But,the 2nd answer (for the first question) says that "HUD had the ability to affect banking practices," the passage does not mention HUD's ability on banking system. The passage refers to CRA as having an impact on banking practices. Therefore, we can not assume that specifically HUD did that. Perhaps, another department affected the banking system. The passage points out that HUD had an impact on leaders though.


The last sentence says

Quote:
that government officials were qualified to tell banks how to lend the money entrusted to them by depositors and investors.


From this it is clear that the gov officials are the members of HUD.

Hope this helps.

Regards
_________________

Need Practice? 20 Free GRE Quant Tests available for free with 20 Kudos
GRE Prep Club Members of the Month: Each member of the month will get three months free access of GRE Prep Club tests.

1 KUDOS received
Intern
Intern
Joined: 23 Sep 2017
Posts: 46
Followers: 0

Kudos [?]: 11 [1] , given: 2

Re: QOTD #5 - In 1977, the Community Reinvestment Act (CRA) was [#permalink] New post 03 Mar 2018, 23:50
1
This post received
KUDOS
How C is the answer for first question ..it is relly cobfusing
Founder
Founder
User avatar
Joined: 18 Apr 2015
Posts: 13344
Followers: 288

Kudos [?]: 3381 [0], given: 12176

CAT Tests
Re: QOTD #5 - In 1977, the Community Reinvestment Act (CRA) was [#permalink] New post 05 Mar 2018, 14:25
Expert's post
This is an inference question

Quote:
economist Thomas Sowell wrote that the CRA, far from being as benign as it appeared, was based on a flawed assumption: that government officials were qualified to tell banks how to lend the money entrusted to them by depositors and investors.



Sowell wrote that the bankers were qualified to give advice in term of money deposits or investments. This was not TRUE. They were NOT qualified indeed.

As it turns out, is TRUE that to give advice is implied to have some expertise to do that.

Hope now is clear to you.

Regards
_________________

Need Practice? 20 Free GRE Quant Tests available for free with 20 Kudos
GRE Prep Club Members of the Month: Each member of the month will get three months free access of GRE Prep Club tests.

Intern
Intern
Joined: 04 Mar 2018
Posts: 28
GRE 1: Q167 V160
Followers: 0

Kudos [?]: 16 [0], given: 6

Re: QOTD #5 - In 1977, the Community Reinvestment Act (CRA) was [#permalink] New post 11 Mar 2018, 09:38
Can anyone pls explain the 2nd answer, why is it C and not B?
Founder
Founder
User avatar
Joined: 18 Apr 2015
Posts: 13344
Followers: 288

Kudos [?]: 3381 [0], given: 12176

CAT Tests
In 1977, the Community Reinvestment Act (CRA) was passed for [#permalink] New post 04 Apr 2018, 10:09
Expert's post


In 1977, the Community Reinvestment Act (CRA) was passed for the purpose of reducing discriminatory credit practices in low-income neighborhoods. The act required Federal financing supervisory agencies to use their authority to encourage lending institutions to meet the credit needs of all borrowers in their communities. The CRA had little impact until 1993, when the Department of Housing and Urban Development (HUD) initiated legal proceedings against lenders who declined too many applications from minority borrowers. Some argue that, while providing equal access to credit is an important aim, pressure on lenders from HUD led to practices that later caused those same lenders to be assailed as “predatory.” In Housing Boom and Bust, economist Thomas Sowell wrote that the CRA, far from being as benign as it appeared, was based on a flawed assumption: that government officials were qualified to tell banks how to lend the money entrusted to them by depositors and investors.
Consider each of the answer choices separately and indicate all that apply.

1. It can be inferred from the passage that the CRA was perceived by some as seemingly innocuous
2. HUD had the ability to affect banking practices
3. Thomas Sowell had asserted that a certain level of expertise is required to direct banks’ lending activities

[Reveal] Spoiler: OA
I,II, and III


Consider each of the answer choices separately and indicate all that apply.

Which of the following can be inferred about discriminatory credit practices?

1. They are more common in middle-income neighborhoods than in high-income neighborhoods.
2. Legislators who voted for the CRA did so because they were opposed to such practices.
3. Critics allege that attempts to combat such practices can have unintended consequences.

[Reveal] Spoiler: OA
III


_________________

Need Practice? 20 Free GRE Quant Tests available for free with 20 Kudos
GRE Prep Club Members of the Month: Each member of the month will get three months free access of GRE Prep Club tests.

Intern
Intern
Joined: 27 Jun 2018
Posts: 7
Followers: 0

Kudos [?]: 3 [0], given: 11

Re: In 1977, the Community Reinvestment Act (CRA) was passed for [#permalink] New post 29 Jun 2018, 19:26
Can someone explain the answer for #2? I thought at least B and C are correct.
Founder
Founder
User avatar
Joined: 18 Apr 2015
Posts: 13344
Followers: 288

Kudos [?]: 3381 [0], given: 12176

CAT Tests
Re: In 1977, the Community Reinvestment Act (CRA) was passed for [#permalink] New post 30 Jun 2018, 09:02
Expert's post
Quote:
In 1977, the Community Reinvestment Act (CRA) was passed for the purpose of reducing discriminatory credit practices in low-income neighborhoods


A says

Quote:
They are more common in middle-income neighborhoods than in high-income neighborhoods.


Quite different.

B

Quote:
Legislators who voted for the CRA did so because they were opposed to such practices.


Nothing is the passage suggests this.

Ask for further assistance.

Regards
_________________

Need Practice? 20 Free GRE Quant Tests available for free with 20 Kudos
GRE Prep Club Members of the Month: Each member of the month will get three months free access of GRE Prep Club tests.

Senior Manager
Senior Manager
User avatar
Joined: 10 Feb 2020
Posts: 479
Followers: 1

Kudos [?]: 115 [0], given: 289

CAT Tests
Re: In 1977, the Community Reinvestment Act (CRA) was passed for [#permalink] New post 10 Aug 2020, 05:54
It can be inferred from the passage that the CRA was perceived by some as seemingly innocuous <- from where we can infer this statement?
_________________

Ever Tried? Ever Failed? No Matter. Try Again. Fail Again. Fail Better!!

2 KUDOS received
Moderator
Moderator
User avatar
Joined: 03 Dec 2019
Posts: 341
Followers: 7

Kudos [?]: 352 [2] , given: 52

Re: In 1977, the Community Reinvestment Act (CRA) was passed for [#permalink] New post 10 Aug 2020, 08:33
2
This post received
KUDOS
Farina wrote:
It can be inferred from the passage that the CRA was perceived by some as seemingly innocuous <- from where we can infer this statement?



That's a good question. The answer to this question is actually buried in the last line of the passage.

"far from being as benign as it appeared"


_________________

Thanks and Regards,

theBrahmaTiger

If you found this post useful, please let me know by pressing the Kudos Button


Rules for Posting

Got 20 Kudos? You can get Free GRE Prep Club Tests

GRE Prep Club Members of the Month:TOP 10 members of the month with highest kudos receive access to 3 months GRE Prep Club tests

1 KUDOS received
Founder
Founder
User avatar
Joined: 18 Apr 2015
Posts: 13344
Followers: 288

Kudos [?]: 3381 [1] , given: 12176

CAT Tests
Re: In 1977, the Community Reinvestment Act (CRA) was passed for [#permalink] New post 10 Aug 2020, 14:13
1
This post received
KUDOS
Expert's post
In Housing Boom and Bust, economist Thomas Sowell wrote that the CRA, far from being as benign as it appeared, was based on a flawed assumption

The red part clearly states the first answer choice

Please read the passage and pay attention to it. Especially the shortest one that can be tricky


Regards
_________________

Need Practice? 20 Free GRE Quant Tests available for free with 20 Kudos
GRE Prep Club Members of the Month: Each member of the month will get three months free access of GRE Prep Club tests.

1 KUDOS received
Manager
Manager
User avatar
Joined: 20 Jun 2019
Posts: 125
GRE 1: Q158 V162
Followers: 0

Kudos [?]: 71 [1] , given: 28

CAT Tests
Re: In 1977, the Community Reinvestment Act (CRA) was passed for [#permalink] New post 12 Aug 2020, 05:57
1
This post received
KUDOS
Question 1

A- True since one person called this benign.
B- If HUD is initiating legal proceedings then it has influence over practices.
C- Yes, because it's stated that "...flawed assumption: that government officials were qualified to tell banks how to lend the money entrusted to them by depositors and investors."

Question 2
A- No mention of how common middle or high income neighbourhoods are.
B- Not really as people who voted for CRA did so because they thought this was harmless.
C- True. This is the assertion Thomas Sowell makes.
Manager
Manager
Joined: 19 Jan 2020
Posts: 56
Followers: 0

Kudos [?]: 34 [0], given: 62

Re: In 1977, the Community Reinvestment Act (CRA) was passed for [#permalink] New post 18 Aug 2020, 03:20
The first line "In 1977, the Community Reinvestment Act (CRA) was passed for the purpose of reducing discriminatory credit practices in low-income neighborhoods", supports Q2 option 2 right? then why is it not an answer.
Founder
Founder
User avatar
Joined: 18 Apr 2015
Posts: 13344
Followers: 288

Kudos [?]: 3381 [0], given: 12176

CAT Tests
Re: In 1977, the Community Reinvestment Act (CRA) was passed for [#permalink] New post 18 Aug 2020, 08:25
Expert's post
Please Sir

see my explantion above provided https://greprepclub.com/forum/in-1977-t ... tml#p21317

Regards
_________________

Need Practice? 20 Free GRE Quant Tests available for free with 20 Kudos
GRE Prep Club Members of the Month: Each member of the month will get three months free access of GRE Prep Club tests.

Re: In 1977, the Community Reinvestment Act (CRA) was passed for   [#permalink] 18 Aug 2020, 08:25
Display posts from previous: Sort by

In 1977, the Community Reinvestment Act (CRA) was passed for

  Question banks Downloads My Bookmarks Reviews Important topics  


GRE Prep Club Forum Home| About| Terms and Conditions and Privacy Policy| GRE Prep Club Rules| Contact

Powered by phpBB © phpBB Group

Kindly note that the GRE® test is a registered trademark of the Educational Testing Service®, and this site has neither been reviewed nor endorsed by ETS®.