Skip to comments.Sociologists: Liberal Policy Didn't Cause the Mortgage Crisis, Racism Did
Posted on 10/10/2010 7:51:00 AM PDT by COUNTrecount
"Predatory lending aimed at racially segregated minority neighborhoods led to mass foreclosures that fueled the U.S. housing crisis, according to a new study published in the American Sociological Review." That's how the Reuters story of Oct. 4th, "Racial predatory loans fueled U.S. housing crisis: study," opens.
The "new study" is an academic article titled, "Racial Segregation and the American Foreclosure Crisis," which was written by a graduate student at Princeton and his professor.
Inasmuch as the "new study" further diverts attention from the real reasons for the foreclosure crisis, and advances racism as a cause, the piece is becoming a smashing success within the "mainstream" media. Not only was the banking industry greedy, but new evidence shows that its "predatory lending" policies were in fact racist as well.
During the primaries and race leading to the 2008 presidential election, gas prices happened to skyrocket and shortly thereafter the giant housing bubble burst. It was like the breaking of a piñata, scattering candies everywhere for Candidate Obama. With a little help from the news media, the bubble's burst couldn't have happened at a better time.
Acting with lightning speed the Democrats and their media created the non sequitur narrative. It was Bush's fault! The free markets failed because the reckless cowboy refused to regulate the banking and financial industries.
Never mind that those were already highly regulated industries -- and no one has yet revealed the regulations that Bush opposed that would have prevented the bursting of the artificial bubble.
Also pay no attention to the fact that the Democrats had controlled Congress since 2006 and had resisted repeated requests for tighter accounting of Freddie Mack and Fannie Mae. The likes of Barney Frank assured us that everything was hunky-dory with the government-backed lending system.
And, lastly, if we are to accept the narrative, we must forget about Jimmy Carter's Community Reinvestment Act, the instrument from which the government created the artificial bubble. The Act is little more than liberal feel-good, social engineering that levels the playing field for low income minorities. According to liberal thought (see the words of former HUD Secretary Andrew Cuomo) institutional racial discrimination was the reason banks were not approving enough loans for minorities.
The federal government therefore had to intervene. The Clinton administration revived and enforced the Act in the1990s with vengeance; and with a little help from groups like ACORN, minority loan approvals reached all time highs.
Application of the Act was done in the name of the right to "affordable housing." Affordable housing really meant that everyone has a right to get a mortgage on a home. At the threat of ACORN members getting crazy in bank lobbies and with the coercion of federal law, traditional qualifications for getting loan approvals (verifiable income levels, sufficient down payments, standard credit histories, etc.) were thrown out the window.
What the federal government forced upon the mortgage industry was like the screeching of fingernails on a chalkboard to the principles of the free market system. No businessman in his right mind would approve loans, in the name of social justice, for those who couldn't afford them. So ridiculous was the practice that the government had to create an entire system to back the devalued mortgages generated by liberal, economic justice policy.
Prior to the bubble's burst the bankers were the good guys so long as they were lending to people who really couldn't afford homes. The government's manipulation of the markets led to trading in worthless paper and derivative hedging by greedy Wall Street investors. But in the heyday of easy loans, easy money and rampant corruption at Freddie and Fannie, the Democrats were happy and content.
So long as home prices were going up and equity was accruing, the artificial markets seemed almost real. The subprime loans seemed to work. It went on for many years. But after gas prices began hovering at $4.00 per gallon, waves of mortgage defaults crashed throughout the country. Once the system collapsed a new set of facts was needed -- and reality was quickly turned upside down.
Even though the mortgage industry was forced to make "risky loans" to meet government quotas the bankers became the bad guys. Risky loans were blamed on the free market system. Capitalism had failed.
The mortgage people were suddenly guilty of selling "predatory loans" to innocent minorities. Liberal Democrats had authored, implemented and maintained the irresponsible lending policies which led to the financial crisis. But after the burst, we saw the most culpable Democrats, Obama, Dodd and Frank, et al, blaming the Republicans and capitalism.
The best fiction novelist in the world couldn't make this stuff up. How the establishment left was able to turn the entire situation on its head is beyond belief (in the aftermath, we even witnessed a surreal Dodd-Frank reform bill). And now we have a "new study" to show that the practice of "predatory loans" was likely based on racial discrimination!
In the piece (the new study) the authors first note that the Fair Housing Act of 1968 didn't work out so well and minorities continue to "live under conditions of hyper segregation" in the big inner cities. Declines in the black population in communities in "New York, Chicago, Detroit, Atlanta, Houston, and Washington," have been "minimal or nonexistent."
I guess we're supposed to attribute the "segregation" problem to racial discrimination and not the government welfare policies that have crippled an entire segment of the black population.
From there the authors tell us that "a careful reading of recent scholarship on segregation and mortgage lending shows that racial discrimination occurred at each step in the complex chain of events leading from loan origination to foreclosure."
You see, "high levels of segregation create a natural market for subprime lending and cause riskier mortgages, and thus foreclosures, to accumulate disproportionately in racially segregated cities' minority neighborhoods."
Hmm. Why do you suppose "segregation" creates "a natural market for subprime lending?" A subprime mortgage happens to be a type of loan for people with poor credit histories. Think there's any connection between poor credit ratings and government dependency? Perish the thought.
Prior to the politicizing of the mortgage industry, people with poor credit histories were turned down for home loans. "Pay your bills, stay at your job, save your money and come back and see me in a few years," was the advice of the banker before ACORN and social justice came along. Subprime loans were an accommodation for people who shouldn't have gotten loans in the first place.
Perhaps the most disturbing part of the "new study" is the section in which the authors essentially call blacks in the inner cities stupid. We're supposed to believe that because "pawn shops, payday lenders, and check cashing services that charge high fees and usurious rates of interest," exist in "minority areas . . . minority group members are accustomed to exploitation and [are] frequently unaware that better services are available elsewhere."
So, the mortgage crisis was not caused by the government forcing lenders to grant loans to those who really didn't qualify, but by "predatory lenders" who targeted inner city minorities who were just too dumb to know that better services were available elsewhere.
The level of dishonesty associated with the liberal media (and academic) narrative of the mortgage crisis is astounding and if the general public ever gets the facts the Democrat Party will be in peril for decades to come.
Risky and aggressive "flipping" also led to many foreclosures, including a couple in my own suburban neighborhood. Many people were banking on housing prices rising forever, which any rational person knew could not happen. In fact, the imminent burst of the "housing bubble" was openly discussed for years before it finally did burst.
Yes all except I do not believe it was racist not to give loans to people who weren’t qualified and of course I would think you agree. $6 Trillion of these forced bad loans were kept out of the budget and that was last February can you just imagine how much more since then have fallen that it looks like we are now going to have to pay for?
Will All of America End up Looking Like Detroit?
Ohh,not sooo my friend. I think they know exactly that their policies were/are the culprit. This is nothing more than a smoke screen. Pablum for their mindless minions. After all, some of their mooks just might start to think about it. And if they sit up all night and think really hard, they may just start to question those liberal policies.
This whole study is designed to keep the mind numbed numbsculls away from the truth. Head em off at the pass so to speak.
The lies are intentional.
“Why read a an overlong piece when the title itself exposes the blind liberal slant of the writer?”
WTH? Don’t go by title alone. I suggest you read the “overlong piece.” You’ll see that the writer rips all the correct a-holes to pieces.
It is amazing to me that the Architect of this subprime mortgage nightmare is even in a position to make ANY suggestions.
The problem is that now the Progressive/Socialist/Fascist/Marxist/Dums are trying to spin on Americans being “racist” for the nightmare they created. This is disgusting, even for Dums.
Unfortunately, qualitative sociology (Frankfurt, Chicago) has a strangle hold on the university level.
There are plenty of honest sociologists who apply the same rigorous methodology that should be used in all scientific fields.
Sociology is not junk science unless the user makes it so.
This is true, but I have noticed that the letters are ALWAYS from the same half dozen people, every day, over and over again. With about two million residents in the area of circulation of these Marxist fish wraps, I find it interesting that only six personal friends of Fidel Castro get printed.
I kinda wonder what the other million nine hundred grand think.
IMHO these loans were “reparations”.
Huh... Well, it is interesting that these “sociologists” believe that blacks are ignoramuses who make easy prey. Personally, I think these “sociologists” are racist. Anyway, does anybody else remember how, back in college, when you met somebody who claimed to be a “sociology major” you just rolled your eyes and chuckled? (Yeah, you’ll get a job...)
Exactly back door reparations and how about the fraud in the Black Farmers settlement too!
This is way overboard...I lol’d.
White liberals (the only kind of liberal) are so embarrasing that even semi-respectable outlets cannot make them seem sane. Liberalism is over folks.
It is a natural gift of the highest form of leftist to be able to wreak destruction on the national scale.
An essential corollary gift is the ability to blame the result on his enemies.
Your first step will be to admit you don't read articles.
Mortgage brokers would come to the RE office I worked from to tell us what was available. I was amazed at the FEDERAL loan options for illegal aliens, people with sub-dismal credit, etc., etc. in the year or two leading up to the crash. It's hard for me to believe banks would do lower their approval standards like that unless they were told to.
None of that was available when I bought my first house decades ago when you had to jump through their hoops to get their approval...especially the 'Do you have a substantial down payment?" hoop.
Predatory lending to Negro families is, indeed to blame, but Uncle Sam required the banks to engage in the predatory lending as a condition of being allowed to lend at all and avoid Federal lawsuits.
If race had anything to do with it, and it does, it was because of reverse racism, white liberal manufactured self congratulatory guilt, and favoritism because of race that caused this.
Conservatives are constantly criticized for their indifference to race. Liberal progressives love to be praised for their race consciousness.
It was precisely racism. Requiring the banks to make loans to racial quotas is Racism.
Identifying prospects by race and making or refusing loans by race is RACIST
I actually read most every article i open but that title absolutely blew my mind.