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.
She is correct. Back in the day we used to find bad risks, and we would hold them down and make them sign their names. And then we would chase after them and force them to buy 60 inch TVs.
It was a tiring job, but someone had to do it.
The poor victims were targeted by her buddies, Barnie Frank, Chris Dodd and Ben Subprime Bernanke.
Injun Marxist speak Communist Party line with forked tongue.
And like most Leftist plans, it was labelled as a way to help them and increase their dignity, all the while designed to crush them even lower and put them more firmly under the government's thumb.
Pinging the list...(As a FYI).
“Unfricken believable.”
Only because you’re paying attention. Take your red pill and go back to sleep. Your government knows what it is doing. All is well.
“minorities were “targeted” by the federal government for access to subprime mortgages, ...”
Exactly. Banks would never have given these loans if they hadn’t been forced to do so by the Federal Government.
__________________________________________
Dodd and Frank should be hanging from lampposts in the financial district. What they did to this country is unspeakable.
Warren is going to ride this horse and it should be stopped.
I was waiting for that succinct summary. Perfect.
Thats it, exactly.
I have said this for years to anyone blaming the Bush administration for the collapse of the economy. Carter’s administration started this demand that banks loan to a certain percentage of folks who really didn’t qualify for loans. Each President added to this bill - Bush did expand it (which should have made him MORE popular with the idiot dems) and lenders of all stripes took advantage of a legal way to repackage and make money off of otherwise bad risk loans. The collapse was the fault of many people - all the way back to Carter INCLUDING people who knew they couldn’t afford to buy a home but used it like another apartment they moved into for the short term, knowing they would have to move out shortly.
Thanks for the ping.
They were. This was Clinton’s minority home ownership program.
I can just see it now...
Banker: “Hee hee hee” [rubbing his hands and curling his Snidely Whiplash mustache] “Here is my evil plan.. Let’s loan them money to buy a house at a great rate!! THAT’LL SHOW THEM!!!!!!!!!!!!! AH-HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA”
Is that how she thinks it went down?
Clinton implemented the law that went back to Carter days, called the Affordable Housing Act.
In it, banks were supposed to stop the practice called “redlining” which means they were supposed to stop declining mortgages to people who could not afford to pay them back. (seriously)
Banks ignored this legislative idiocy.
Bill Clinton got Andrew Cuomo to SUE a bank for this practice (of making sure someone could afford a loan!) AND WON what was then the largest settlement in history ($12 billion, I think).
Other banks watched this happen.
Other banks then were hit by the Fed Government with the threat “give loans to people who can't afford them or we will sue you” and “oh, by the way- we will GUARANTEE those loans so you never lose money on them”
Bankers, not generally being stupid, saw they were in a no win situation EXCEPT if they went along with the government regulations.
.. fast forward 10 years...
Loans are defaulting at astonishing numbers- the government blames banks for ‘predatory lending” practices (that the government forced them to do)
So it really was a lose-lose situation after all for the banks.
EXCEPT FOR Goldman Sacs, which embraced the suckage whole- heartedly, AND begged for more AND donated money in record amounts to Democrats that took over Congress the last 2 years of the Bush II terms.
In return they got a record-breaking federal bailout.
Does Senator Warren realizes everything about her can be fact-checked within minutes?
The Left's narrative on the housing crisis was just the usual "minorities-hit-hardest" story. The vast majority of homeowners who lost their homes were "white," not "minority." Maybe the CRA is bad policy, but it had little to nothing to do with the housing crisis. Of the 2.5 million foreclosures from 2007-2009, only 240,0202 were of homes owned by "black" owners and 335,950 owned by "Latino" home owners.
Back then, when the interest rates fell low, many people started buying overpriced houses they couldn't afford, and then they borrowed against those homes to pay for vacations, boats, new cars, etc. Then, of course, some of them lost their homes.
I had a friend who lost her home because she became seriously ill and the medical bills drove her family into debt. Those are the people who deserve sympathy. It wasn't her fault she became ill. But, many people lost their homes because they overpaid and overspent. That's what really happened. No one wants to say that, though. ;-)
only 240,020 were of homes owned by "black" owners
Her claim is the equivalent of discovering gambling in a casino.
The relationship would seem to me to be more a case of “demographic alignment” than targeting.
They’re being targeted for high interest rate credit cards now...along with everybody else.
Doesn’t fit the commie narrative, though. Leftists are portraying banks as the essence of evil, unbridled capitalism that can only be contained by noble politicians and bureaucrats.
Eat your spinach and like it, Comrade!
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