Posted on 12/08/2014 2:10:54 PM PST by SeekAndFind
Progressive icon Sen. Elizabeth Warren (D-MA) recently dropped a bombshell in a private meeting with Boston-area donors, according to a report in Politico. The dispatch focuses primarily on Warren’s candid criticisms of President Barack Obama and his pick to serve as undersecretary for domestic finance at the Treasury Department, Antonio Weiss. This bit of fractious infighting within the Democratic Party will provide pundits with an opportunity to examine the divisions within the Democratic coalition, but Warren also made a more interesting contention in this meeting that merits further review.
According to sources who attended that meeting, Warren heavily criticized the federal government’s approach to the subprime mortgage crisis in 2008. She added that the financial crisis disproportionally affected African-American and Hispanic families because they were “targeted” by the federal government.
Politico does not elaborate on what Warren meant, but her lament is a familiar one on the left. The argument stipulates that black and Hispanic families, many of whom suffer rates of poverty greater than those of the population of American whites, were more frequent beneficiaries of subprime lending prior to the collapse of the housing market. As a result, minorities suffered at a rate greater than did their non-minority counterparts when the bottom fell out.
This is not an entirely unsupported claim.
The results of the Department of Housing and Urban Development investigation in the wake of the mortgage crisis in the Atlanta area lent credence to this assertion.
“In general, the analysis shows that subprime lending is more prevalent in lower-income and minority neighborhoods than in higher-income and white neighborhoods,” the HUD study read. “This likely indicates that because of their lower incomes, lenders may consider these borrowers to be a higher credit risk, and these borrowers may therefore be less likely to qualify for prime loans.”
“However, a lack of competition from prime lenders in these markets to find creditworthy borrowers may increase the chances that borrowers are exposed to the predatory practices of a subset of subprime lenders,” the report continued. “There is also evidence suggesting that after controlling for income, predominantly black neighborhoods may be comparatively underserved by prime lenders.”
By HUD’s own estimation, the “targeting” minority groups underwent is a bit more complex than the left would have you believe.
The supposed “targeting” minority applicants who received low-interest loans in order to increase access to housing was not merely a bug but a feature of the administration of the 1977 Community Reinvestment Act (CRA).
“In the 1990′s under the administration of Franklin Raines, a Clinton Administration appointee, Fannie Mae began to demand that the lending institutions that it dealt with prove that they were not redlining,” read an analysis via San Jose University economics professor Thayer Watkins. “This meant that the lending institutions would have to fulfill a quota of minority mortgage lending.”
A New York Times report in 1999 celebrated the extension of low-interest loans to minority applicants, which had exploded under President Bill Clinton.
Home ownership has, in fact, exploded among minorities during the economic boom of the 1990′s. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University’s Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.
In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.
In a sense, minorities were “targeted” by the federal government for access to subprime mortgages, but this was a policy pursued by bureaucrats who presumed that they were helping to elevate low-income minority families out of poverty by offering the opportunity of homeownership.
Though the expansion of access to these types of loans began under the Clinton administration, George W. Bush’s administration expanded the practice and oversaw the loosening of controls.
While it is arguable as to whether the extension of these loans contributed to the 2008 financial collapse, it is indisputable that they were extended more often to low-income minority applicants.
This is only one aspect of the debate on the nature of government intrusion into the housing market with effects that so often negatively impact minorities that few on either side of the political aisle really want to have. Racially poisonous outcomes arising from public policy surrounding socially progressive lending to minority home loan applicants is as old as the New Deal.
In order to finance the development of the suburbs, as Watkins observed, the process of “redlining” became a feature of government policy. In the 1950s and 1960s, the process in which only certain types of applicants – the criteria for whom often included race – could get loans to live in clearly defined neighborhoods accelerated.
“We’ve replaced middle class communities with poor communities,” Massachusetts Institute of Technology Professor Craig Steven Wilder told PBS as part of a 1999 documentary. “Why is there a black ghetto in every city in the United States? The answer is public policy.”
The issue of race and housing development is a complicated one. While Warren touched on a grain of truth in her statement about minorities being “targeted,” she likely glossed over the fact that so many minorities who suffered in the wake of the financial crisis were just another generation of victims of government officials who tyrannize with good intentions.
No achievement motivation in the black families, no push to do/submit homework, no desire to do well. So when they graduate and take jobs at McDonalds, etc they work for minimum wage. If banks talk to them it is bottom feeders harvesting money from people who do not understand the basics of personal finance, probably can't read well, and are steered by other bottom feeding realtors to marginal homes.
The mexican parents were more involved, and encouraged their children. Most were interested in earning enough to by a ranch(farm) back in mexico, and at least had plans.
Warren will say or do whatever is needed to become the top dog leftist for the primary season.
it isn’t. the Andromeda galaxy might work, but if life exists there, it probably doesn’t want her either.
The problem is that many of them, even with the best of intentions, couldn’t have kept their homes if there was even a slight blip in the economy. They were heavily in debt for other things, had no savings and only marginal jobs, and normally they wouldn’t have qualified for a mortgage unless they could have done something to overcome this (such as save up a large down payment). So the government set these people up to fail.
One of the things a family member who was in charge of a Habitat group told me is that many of the people who took on a mortgage seemed to have no idea that it actually had to be paid regularly (they had been tenants in government housing or government subsidized housing all of their lives) and they also didn’t know that they were responsible for repairs, either doing the repairs themselves - and these were people who didn’t even know how to use a screwdriver to reattach a door knob - or paying for someone else to do them. So they had no idea of the underlying costs of home ownership, and as soon as there was any problem, they weren’t able to deal with it.
Approved for loan:predatory lending!
Not approved for loan:redlined!
You can’t win with marxists.
to the Bank: you must lend
This was why banks would not lend to sub standard areas. High crime, low income areas.
Community organizer Obama forced the issue.
The “victims” went on to elect this clown gov of New York
https://www.youtube.com/watch?v=Lr1M1T2Y314
I wonder if Belgium might agree to take her.
AND TO SOLVE THIS, WE NEED MORE LEFTIST POLICIES! YEAH! DOWN WITH THE EVIL RICH!
During President Carter’s administration they passed ‘The Community Reinvestment Act’...it was all about the minorities and making them an opportunity to improve life.
In President Clinton’s time the protesters went to bankers homes and insisted the minorities get loans with no money down and lower payments....and no discrimination on income. It was nasty demonstrations at CEO Bankers homes.
The subprime mortgage is the vehicle that was used.
The Black Sholes formula for those investments won a Nobel prize after Black died. And those were the investments that ruined foreign investors, and those who wanted real estate investments and who lost their shirts as real estate has not made a full recovery....many are still down 30-35% of 2008 values.
Clinton signed the repeal of the Glass-Steagle Act made after the Great Depression to prevent the use of too much capital that should have stayed with the bank....it was then loaned out for subprime mortgages.
The repeal was proposed by a Republican, passed and signed by President Clinton. That opened the door to banks being insecure for a safety net of deposits in an emergency run on the bank.
People lied about income and got loans they could never repay, as these were the poor whites and minorities and some had gotten jobs to buy the houses or lied about income....they had been used to calling the landlord when things went wrong. Then others jumped on this bandwagon and the out of control loans began.
The middle class jumped on this as investments, and lost.
The liberals continued pushing this home ownership with no money down....’an accident looking for a place to happen.’
In 2008 when the stock market crashed, jobs were lost, and people lost tens of thousands of savings on Sept 14, 2008 $4 trillion ....
Well the real estate market crashed big time and the whole thing unraveled....still unraveling, it’s not a recovery...it’s a pause and a postponement without real full time jobs. Millions of part time jobs with inflation.
So this is what Elizabeth Warren is talking about and the liberals blame the banks...instead of their own.
Subprime mortgages and bank loans were made by people like Nancy Pelosi’s son, who made loans at Countrywide...using those types of mortgages. Banks got into it late, near the end of the game as they saw mortgage companies make so much money....it seemed like a golden egg investment. So they loaned out too much of their capital that was supposed to be in the bank, which had been made easy by the safety repeal during Clinton years.
Nothing but junk paper mostly built on the poor, who knew nothing about owning a home...and how easy foreclosure could come knocking in hard times. They were better off before the liberals started trying to get them into home ownership they could not afford, without training them on what it meant in responsibility and preplanning.
For some it was job loss, for some inability to plan for those added expenses and upkeep. For most it was being in ‘over their head’ with mortgage payments they could not afford in the first place.
The left wants to blame the banks for the greed, however it was the leftist politics and protests insisting the banks would do this...and when the mortgages companies jumped at the subprime opportunity....and made huge money, then banks jumped in.
The poor got the loans, and the mortgagers lost their shirts in the end....we had to bail out the banks, and millions lost homes, life savings, and other investments.
Not in a nutshell, but all I can remember at this time.
RE: Barnie Frank did it........ she should go kick his ass
PLEASE NO. IT’s already very sore from what he has been doing all these years (HEH, HEH).
Not Belgium; the Netherlands — at least if she causes
problems for them they allow euthanasia for humans.
(regrettable in any other case, but I’ll make an exception in her case)
Just like wage earners are “targeted” by a predatory government with confiscatory income taxes.
It wasn’t just homes that had to be abandoned, it was the entire city of Detroit. Now, instead of Black gangs roaming the streets there, packs of wild dogs have taken over.
Is there any further atrocity the Democrats in Washington can inflict upon poor inner-city Blacks? Their latest gambit, led by Obama and Eric Holder in the wake of Ferguson, seems to be urging Black youths to continue protesting and looting and even burning down their own communities so that even abandoned houses won’t be left.
Targeted by Carters and Clintoon’s administrations. Banks were punished by both of them for not lending “enough” to minorities.
Well...
I know everyone here believes the CRA was the culprit, forcing innocent banks and mortgage companies to give loans to people with bad credit.
Meanwhile, the Left continues to believe borrowers with bad credit were victimized.
But, both narratives are false. (Yes, I know everyone here disagrees.)
The truth is that, in the late 90’s, mortgage companies started selling to everyone, of all backgrounds, with good or bad credit, because they had nothing to lose if the borrower didn’t pay. They were in the business of bundling those mortgages and selling them to banks or other companies. So, they simply sold to as many borrowers as possible, then put everything into a package and passed it on. And then the next company or bank would pass it on. And so on.
The borrowers weren’t victims, either. They were free to turn down those offers, and they could’ve kept their own greed in check. ;-) Instead, they bought large overpriced homes and then often borrowed against those houses. That’s why they got into trouble.
Actually, an adjustable rate mortgage (ARM) can work out well for people with bad credit, if they buy homes they can afford. If they play their cards right, they can lock in at a lower rate later.
+1.
How does helping to elevate low-income minority families out of poverty by offering the opportunity of homeownership work out, if they have to make mortgage payments? -tom
Exactly. Warren is a very bad joke. She is about as real as her Indian heritage.
Can you say Fannie and Freddie? What about Dodd/Frank? Thought not.
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