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.
Most of the buyers in that category were second home buyers who believed they were “investors” and planned to flip the homes in a rising market. So it’s absolutely true that an overheated market made it easy for many people and many banks to get into trouble, because it looked like easy money. And, just as with the low income home buyers, as soon as there was a blip in the economy, it all fell apart, although it was harder to feel sorry for idiots who thought “leveraging” and using bad, over-priced investments to buy other bad, overpriced investments was a good idea.
However, the thing that caused the distress and the headlines were the lower income properties “owned” by the people who lived in them (not speculators), who were so economically vulnerable that they would never have gotten a loan in the first place without the Feds, and of course couldn’t survive even a slight dip in the economy and actually did end up homeless.
Yep. Warren has no idea what the CRA was and how loans were FORCED on banks starting with size of deposits and started from the large banks down to to every bank that made housing loans. I guess she never heard of NINJA loans.
In actual fact, many minorities robbed the banks and taxpayers of billions by buying rental properties and never paying mortgage payments or refinancing houses and taking cash out and never making payments. The banks were left with the mess and now are being blamed for what they were in fact forced to do. What sense did it make to make a loan to an illegal alien with 20 people living in the property.
This is the intent of the Fed DOJ ,
and when the new owners can't pay the sub-prime mortgage, because they dont have the income, savings , etc.,( all parts of affording any housing).
The FED is going to be looking for the taxpayer to pay for the sub-prime mortages that the banks were coerced into issueing by the Fed to issue in the first place.
Belgium also allows euthanasia, but I’m just a happy to have her move to the Netherlands. As long as she never returns.
Barney Frank and Andrew Cuomo while he was head of HUD
The Leftists know. (some are stupid and maybe she’s one) They just love to play the race game. They got them minorities in using it. Now they pretend to want to protect them, even though they got them into such loans.
Cracks me up, and the media pretends not to know this.
Hell, even the Republican are quiet as church mouses about it.
So the banks willfully put themselves in the position where they would end up with a ton of properties nowhere near the worth of the loan value? Ok........
I was in the mortgage business for years. Back in Ohio, around 1996, I remember cities in Ohio passing laws that stated that lenders were not allowed to charge prepayment penalties to high risk borrowers, and that ALL sources of income had to be counted toward qualification. This included unemployment benefits, food stamps, and welfare. I remember several lenders getting sued in the Cleveland market for refusing to comply with this. They were sued by this little organization named ACORN. Lead counsel for ACORN in many of these suits was some guy named....you guessed it, Barack Hussein Obama. As it turns out, some years later this fella went on to sue those same lenders who were forced to make those loans for “predatory lending”. And, a new bureaucracy was formed under his direction (the CFPB) that made a bunch of rules governing how lenders were supposed to lend their money using the newly minted Qualified Mortgage rule.
Talk about a racket...
Well BHO is still ‘playing both sides against the middle’; and his dishonesty is in larger numbers now....billions, trillions...etc.
That is very much how it seemed it would turn out according to the left positioning of their bank attacks to get this going...it is a win-win for criminal minds.
Lawsuits are at the crux of most everything Zero, Holder, Sharpton and the NAACP;ACLU;ACORN or other groups do. And the families who lose children sue and get millions, however some lawyer gets 30%+ of that settlement or win. This seems like a parasitic lifestyle that preys on someone’s loss/grief, and it is also finding ways to get more government grant money....not that they don’t already get huge taxpayer grants for all kinds of things.
I’ve kept up with enough of what happened in this last crash, because people should not blame just one area for what was a scheme, that covered a lot of territory, people, and damage to our nation.
However, it seems you had a front row seat. So glad you let me know how it went down. Seems this was a well planned scam benefiting the lawyers more than anyone else from the git-go. Of course Mortgage companies benefited in the short term, but not the long term. Banks...well, with derivatives and billions owed, it seems the taxpayer backed up their losses with bail outs.
Thanks.
Add to that, "you can't cheat an honest man." These mortgages were too good to be true, given the "predated" mortgagors credit histories.
. Banks were falling in line with the government crusade against “redlining.”
Right. The banks were forced to give loans to inner city folks with no job and on public assistance. This was hugely promoted by the Congressional Black Caucus.
It got so bad that even the Clintoon was expressing it went too far.
Another sterling example of minority trying to get stuff for minorities which they cannot afford and have not worked hard enough to put some effort into it and not just walk away.
Wampumnomics.
testing...testing.....
Warren calls it like it was but only back as far as 2008 ? and she only calls out the outcome, not the process ?
The 1994 case of Buycks-Roberson v. Citibank Fed. Sav. Bank
was a class-action lawsuit against Citibank Federal Savings The lawsuit sought to end the practice of redlining.
Obama was on the legal team representing the plaintiff.
This was settled out of court.
Clinton\Reno, in the mean time, was threating “vigorous enforcement” pushing banks to make sub-prime loans specifically to minorities, when they couldn’t qualify for a standard mortgage.
The lenders were forced to provide mortgages to minorities - minorities WERE targeted. It was the only way they could legitimately get close to owning a home.
Not only kicking Barney Frank, but also the Boston Fed, whose bogus report on mortgage lending in the early 1990s started this whole subprime disaster.
So this Warren charlatan has nobody to blame but all the friggin Harvard geniuses who live in Boston.
My sympathies to people of any background who lost their homes through no fault of their own. But, back then, people of all backgrounds were buying homes that were overpriced and far above the range they could afford. And then they were refinancing, borrowing against their houses. It was a crazy time, completely out of control.
According to what I’ve read, the majority of foreclosures during the housing crisis were of owner-occupied homes, and most of those homes were owned by “white” owners. The only place where I can find statistics right now is here:
Clinton and Ruben hatched the house loans based on race program. They dropped all “racist” standards of qualification and gave poor people loans, ensuring their ultimate economic ruin and the crash of real estate. Anyone who mentioned it was a bad idea was shouted down as a racist. When it all crashed, many in the middle class lost their shirts because they had bought their homes built upon a fake, inflated demand (of homeowners with no money) which caused house prices to rise unrealistically.
They have done the same thing with student loans and credit cards. Many parents in the working and middle classes co-signed loans that their children will never be able to pay back.
America is the absolutely only place in the world where you hand someone hundreds of thousands of dollars to invest in real estate, never get one penny back, and then be accused of racism and fraud for doing it.
No other nation does that, no other society would ever think handing poor people huge sums of money would be, in itself, an evil act. No other poor, anywhere on Earth, are ever handed this wealth.
It is surreal.
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