Apparently, if you don't follow the Faux News genre of the media (as I don't), you might have missed this odious layer of blame that is rapidly arising in the mire of the subprime crash.
I first got wind of this on MSNBC's first-person, main-street Gut Check, where Joe Sixpacks, Jane Hockey Moms, and real people too were sending in stories of life under the financial crisis; MSNBC was running the vignettes on the face page of their news site for several days a week or so ago. The original quotes are down now (sorry, no link), but a gentleman from a heartland city unequivocably stated that if we hadn't been pushed to lend to minorities and po' folks - what with the push for affordable housing for all and all that nonsense and whatnot - we would never be in this mess.
Huh. Minorities at fault for the subprime crisis? Affordable housing on the hook for banking failures, in a market bubble? This was the first I had heard of it, but this sort of rhetoric never comes out of nowhere.
Sure 'nuff, the theme of blaming the poor people and minorities is nothing new even in good times - but a frightening specter as the creep of bad times rises of over the horizon like the bad moon of a Creedence Clearwater Revival tune.
If you google "community reinvestment act subprime," you'll get a gander at this burgeoning debate. The Community Reinvestment Act was passed in 1977 to push banks and other lenders to be accountable for their historic discrimination against minorities and poorer demographics when deciding on who to loan out mortgages to; it's been amended a handful of times since then. The rightward-leaning elements of the media would have you believe that this Carter-era legislation was responsible for the 2008 crash - some thirty years after the fact - and that mortgage companies and lenders were simply forced, forced!, to hand over fistfuls of cash to the high risk pool that is poor minority families.
Not so fast.
There have been a number of very fine op-ed pieces debunking this racist, blame-the-victim rhetoric, and it behooves every progressive out there to keep one of these debunkings in their back pocket. As times get tough and the inevitable scrambling begins for the dregs of the recessionary economy, it is vital to remember - and be able to successfully argue - that racism has no place at this table.
To wit, Newsweek (yeah, go figure, Newsweek) ran a thorough and well-sourced piece on how and why the subprime crash does not fall on the backs of poor and minority owners:
There's an old adage liberally stolen from an old West bank robber, I believe it was Willie Sutton: when asked why he robbed banks, he simply looked sideways and said, "'Cause that's where the money is." How's about we employ a nineteenth-century tactic to sorting out the who and how of the fault for the subprime crash: we just look at who is holding fistfuls of cash at the end of the game, and there you might find your answer of who was rifling through the til while the regulators were asleep.
I first got wind of this on MSNBC's first-person, main-street Gut Check, where Joe Sixpacks, Jane Hockey Moms, and real people too were sending in stories of life under the financial crisis; MSNBC was running the vignettes on the face page of their news site for several days a week or so ago. The original quotes are down now (sorry, no link), but a gentleman from a heartland city unequivocably stated that if we hadn't been pushed to lend to minorities and po' folks - what with the push for affordable housing for all and all that nonsense and whatnot - we would never be in this mess.
Huh. Minorities at fault for the subprime crisis? Affordable housing on the hook for banking failures, in a market bubble? This was the first I had heard of it, but this sort of rhetoric never comes out of nowhere.
Sure 'nuff, the theme of blaming the poor people and minorities is nothing new even in good times - but a frightening specter as the creep of bad times rises of over the horizon like the bad moon of a Creedence Clearwater Revival tune.
If you google "community reinvestment act subprime," you'll get a gander at this burgeoning debate. The Community Reinvestment Act was passed in 1977 to push banks and other lenders to be accountable for their historic discrimination against minorities and poorer demographics when deciding on who to loan out mortgages to; it's been amended a handful of times since then. The rightward-leaning elements of the media would have you believe that this Carter-era legislation was responsible for the 2008 crash - some thirty years after the fact - and that mortgage companies and lenders were simply forced, forced!, to hand over fistfuls of cash to the high risk pool that is poor minority families.
Not so fast.
There have been a number of very fine op-ed pieces debunking this racist, blame-the-victim rhetoric, and it behooves every progressive out there to keep one of these debunkings in their back pocket. As times get tough and the inevitable scrambling begins for the dregs of the recessionary economy, it is vital to remember - and be able to successfully argue - that racism has no place at this table.
To wit, Newsweek (yeah, go figure, Newsweek) ran a thorough and well-sourced piece on how and why the subprime crash does not fall on the backs of poor and minority owners:
"The Community Reinvestment Act applies to depository banks. But many of the institutions that spurred the massive growth of the subprime market weren't regulated banks. They were outfits such as Argent and American Home Mortgage, which were generally not regulated by the Federal Reserve or other entities that monitored compliance with CRA. These institutions worked hand in glove with Bear Stearns and Lehman Brothers, entities to which the CRA likewise didn't apply. The CRA didn't force mortgage companies to offer loans for no-money down, or to throw underwriting standards out the window, or to encourage mortgage brokers to aggressively seek out new markets. Nor did the CRA force the credit-rating agencies to slap high-grade ratings on subprime debt.Well said.
"Second, many of the biggest flameouts in real estate have had nothing to do with subprime lending. WCI Communities, builder of highly amenitized condos in Florida (no subprime purchasers welcome there), filed for bankruptcy in August. Very few of the tens of thousands of now-surplus condominiums in Miami were conceived to be marketed to subprime borrowers, or minorities - unless you count rich Venezuelans and Colombians as minorities.
"Third, lending money to poor people and minorities isn't inherently risky. There's plenty of evidence that in fact it's not that risky at all. That's what we've learned from several decades of microlending programs, at home and abroad, with their very high repayment rates. And as The New York Times recently reported, Nehemiah Homes, a long-running initiative to build homes and sell them to the working poor in subprime areas of New York's outer boroughs, has a repayment rate that lenders in Greenwich, Conn., would envy. In 27 years, there have been fewer than 10 defaults on the project's 3,900 homes. That's a rate of 0.25 percent.
"Investment banks created a demand for subprime loans because they saw it as a new asset class that they could dominate. They made subprime loans for the same reason they made other loans: They could get paid for making the loans, for turning them into securities, and for trading them - frequently using borrowed capital."
There's an old adage liberally stolen from an old West bank robber, I believe it was Willie Sutton: when asked why he robbed banks, he simply looked sideways and said, "'Cause that's where the money is." How's about we employ a nineteenth-century tactic to sorting out the who and how of the fault for the subprime crash: we just look at who is holding fistfuls of cash at the end of the game, and there you might find your answer of who was rifling through the til while the regulators were asleep.