Regardless of Richard Kuehl's chronology (letter, Oct. 1), CRA lending did not cause the financial problems. Furthermore, Freddie Mac and Fannie Mae are not the cause of this mess.

CRA loans are held in bank portfolios and are not sold in the secondary market for two reasons:

1. Underwriting requirements of CRA programs restricted their sale.

2. These loans are made at below-market rates.

Blame can be ascribed to many players in the market. The Federal Reserve and bank examiners did not do their jobs. Rampant investor speculation fueled high home prices. Lenders saw opportunities to profit in the subprime and Alt A markets using teaser rates and/or lax underwriting.

These loans were packaged by Wall Street firms into securities and sold to unwitting investors. The rating agencies abetted by setting subordination levels too low to protect the senior bond holders.

Finally, in the early 1990s, Congress required that Freddie Mac and Fannie Mae purchase a higher percentage of affordable loans. These new requirements ultimately forced the GSEs to buy the AAA-rated subprime mortgage-backed bonds as it was becoming more difficult to meet the goals due to changing market conditions.

Freddie Mac's and Fannie Mae's portfolios are performing significantly better than the rest of the market.

So, while Kuehl seems to have drawn some kind of logical thread, he is not even in the ballpark. There are no simple answers here, and ascribing blame or responsibility isn't simple either.

Dan Kelly

Pinehurst