Jack & Jill Politics

The main reason I haven’t written about this before was that, to me, the strategy was so prima facie ridiculous, racist and self-serving, I was sure no one could possibly take it seriously. I mean, I literally chuckled and shook my head the first time I heard tell of it and did a Lil Jon “HWHUT!?”

But leave it to me to fail to see the enduring appeal of a classic conservative “Blame the Niggers” strategy. Black people are sort of used to taking the blame unjustly for all of society’s ills. A lot of the time, we just roll our eyes, shrug it off and go about our business, just trying to put food on the table for our families.

Right now, certain people – certain predatory lenders and those who supported them – are looking for someone to blame. Those who asked for de-regulation and self-governance are looking for a bailout from their mistakes and when you’re looking for government welfare, why not lay blame on the (non-existent) “welfare queens” with whom you’re now competing? Who took your money, your house, your retirement savings, your job, your Christmas? Certainly not anyone with wealth and power, in charge, with access to policymakers, making decisions that affect millions. No, America — this is so simple. Who did this to America? Why, the niggers! The niggers did it!

It makes me think of Shaggy’s timeless reggae hit which also climbed the charts here in the U.S. for awhile “Wasn’t Me”:

But she caught me on the counter (It wasn’t me)
Saw me bangin’ on the sofa (It wasn’t me)
I even had her in the shower (It wasn’t me)
She even caught me on camera (It wasn’t me)

Yes, I’m talking about the bald-faced, cynical racist attempts to link affordable housing initiatives like the Community Re-investment Act (CRA) to the housing crisis that’s the underpinning of the global financial mess we’re in now. Experts have estimated that 80 percent of high-priced subprime loans were offered by financial institutions that are not subject to the CRA. Let’s here and now just totally debunk that pitiful and incorrect theory. Just remember, conservative apologists for lax Bush administration economic oversight (aka my friends) – when you point a finger, there are 3 other fingers pointing in the opposite direction, right back at you.

The fact is that minorities actually tend to pay more than our share, receiving on average much higher interest rates than whites with the same credit history.

Media Matters has done a great job and has a whole page dedicated to myths and falsehoods being promoted under the “Blame the Niggers and Spics” (aka “minority lending”) Strategy. I’m going to excerpt the 1st myth and leave you to read the rest. The thing about this kind of strategy is that it spreads in even uglier directions as history shows us, e.g. “Blame the Jews.” I love how “minority” equals weak credit history. Never mind the CRA was designed to address problems in lending during Jim Crow (which persist today) when having good credit didn’t make it any easier for minorities to receive equal treatment by banks and mortgage firms. Ugh.

From Media Matters:

MYTH: The 1977 Community Reinvestment Act forced lenders into irresponsible lending

In a September 28 Boston Globe column, Jeff Jacoby asserted:

The roots of this crisis go back to the Carter administration. That was when government officials, egged on by left-wing activists, began accusing mortgage lenders of racism and “redlining” because urban blacks were being denied mortgages at a higher rate than suburban whites.The pressure to make more loans to minorities (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to ‘meet the credit needs’ of ‘low-income, minority, and distressed neighborhoods.’ Lenders responded by loosening their underwriting standards and making increasingly shoddy loans.”

Jacoby is not alone in his reference to “minority” lending. On the September 18 edition of Fox News’ Your World, host Neil Cavuto asked Rep. Xavier Becerra (D-CA), “[W]hen you and many of your colleagues were pushing for more minority lending and more expanded lending to folks who heretofore couldn’t get mortgages, when you were pushing homeownership … Are you totally without culpability here?” Cavuto later said, “I’m just saying, I don’t remember a clarion call that said, ‘Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster.’ ”

But the suggestion that the financial crisis was caused by banks lending irresponsibly to comply with the CRA is widely discredited. According to housing experts, a large number of subprime loans were not made under the CRA, which applies only to depository institutions. A study released earlier this year by a law firm specializing in CRA compliance estimated that in the 15 most populous metropolitan areas, 84.3 percent of subprime loans in 2006 were made by financial institutions not governed by the CRA. Moreover, Janet Yellen, president and CEO of the Federal Reserve Bank of San Francisco, stated in a March 2008 speech that “studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households” [emphasis added].

In testimony before the House Financial Services Committee, University of Michigan law professor Michael Barr stated:

Despite the fact that CRA appears to have increased bank and thrift lending in low- and moderate-income communities, such institutions are not the only ones operating in these areas. In fact, with new and lower-cost sources of funding available from the secondary market through securitization, and with advances in financial technology, subprime lending exploded in the late 1990s, reaching over $600 billion and 20% of all originations by 2005. More than half of subprime loans were made by independent mortgage companies not subject to comprehensive federal supervision; another 30 percent of such originations were made by affiliates of banks or thrifts, which are not subject to routine examination or supervision, and the remaining 20 percent were made by banks and thrifts. Although reasonable people can disagree about how to interpret the evidence, my own judgment is that the worst and most widespread abuses occurred in the institutions with the least federal oversight.

The housing crisis we face today, driven by serious problems in the subprime lending, suggests that our system of home mortgage regulation, including CRA, is seriously deficient. We need to fill what my friend, the late Federal Reserve Board Governor Ned Gramlich aptly termed, “the giant hole in the supervisory safety net.” Banks and thrifts are subject to comprehensive federal regulation and supervision; their affiliates far less so; and independent mortgage companies, not at all. Moreover, many market-based systems designed to ensure sound practices in this sector-broker reputational risk, lender oversight of brokers, investor oversight of lenders, rating agency oversight of securitizations, and so on — simply did not work. Conflicts of interest, lax regulation, and “boom times” covered up the extent of the abuses — at least for a while, at least for those not directly affected by abusive practices. But no more.