I just heard the official right wing spin on the economic crisis---blame it on minorities!

[goodgd_yall]

It goes like this---this does not show the failure of the free market, but the result of government interference in the free market. It's social engineering that got us in this mess. UNDER CLINTON (those evil Clintons!), banks were forced to make home loans to minorities!

That is so incredibly SICK! Leave it to the RW to sow discord and hate.

[HysteryDiagnosis]

1. I've heard that... and I challenge people to tell me how a relatively

small percentage of citizens crashed the entire economic system. They stand there with not much to say. Then I explain the tenets of fraudulent loans and predatory lending. They almost get it but their bias gets in the way.

[goodgd_yall]

3. I just heard this on cable news

They actually have the nerve to go public with this idea.

[HysteryDiagnosis]

6. People live in utter disbelief that there are people in control who

are more dangerous with a pen than with a gun. Personally I'd rather be robbed at gunpoint than at penpoint. One is rather shortlived usually taking what's on your person... the other can for lack of better terms take the whole person.

[anigbrowl]

11. Jews, blacks, Mexicans, whoever. Doesn't matter when you're looking for a scapegoat.

I hate to trigger Godwin's law, but it's not like Hitler's blaming of the Jews for everything in Weimar Germany and beyond had anything to do with reality either. Expect to hear PLENTY from the RW about home and car loans going to illegal aliens and suchlike in the coming days.

[goodgd_yall]

19. Godwin's law

applies in this case. It's very dangerous to blame economic troubles on a group. Luckily we aren't in as dire straits as Germany was in the 20s.

[KamaAina]

22. Yet.

:scared:

[anigbrowl]

24. Just bear in mind...

that hyperinflation etc. did not lead directly to Hitler's rise to power. By 1923 the currency was stabilized and the German economy continued to improve steadily until 1929, when everything went pear-shaped for obvious reasons. Hitler gained power 4 years after that.

[FVZA_Colonel]

25. Godwin's law was never meant to be an automatic value judgement on the worth of the comparison,

simply a description of a liklihood of the comparison. I have no problem with it right now.

[Skink]

2. Predatory bankers don't discriminate.

everybody knows that.

[mzmolly]

5. Absolutely. They're like used car salesmen who prey on those who are not financially savy.

My husband worked for such a company for a couple weeks. He decided he could not participate in scamming in the way he would have been required to. His boss, a young guy who made 400K annually quit his job because he said he wanted to be able to look himself in the mirror.

[RoccoR5955]

4. It was only a matter of time, until they played the "minority" card! n/t

[EFerrari]

7. Yes, I've been hearing that for a week. Black people did this

according to these horrible cowards.

[bunkerbuster1]

8. They've been saying that for awhile. here's what you throw back.

Mostly they're blaming the CRA.

Jay Bookman ripped this one's head off and shat down its neck here:
http://www.ajc.com/blogs/content/shared-blogs/ajc/bookman/entries/2008/09/23/ive_been_watching_henry_paulso.html#comment-135592403

the CRA has been in effect since 1977. That’s 31 years ago. As Matt Yglesias puts it:

“Are we supposed to believe that CRA was working smoothly throughout the Carter, Reagan, Bush I, and Clinton years and then only under Bush II did overzealous anti-”redlining” enforcement come into play, perhaps a result of Dubya’s legendarily close relationship with ACORN? Or maybe overzealous enforcement back in the late 1970s is somehow responsible for a real estate blowout that only materialized 30 years later? It doesn’t even come close to making sense.”

Second, the CRA applies only to traditional banks, which in Atlanta and other metro areas orginate less than 25 percent of mortgages.

Third, while a few smaller traditional banks have failed, the far bigger problem has been with mortgage companies and investment banks, which have no CRA requirements. If CRA was a major problem, you would see CRA-regulated neighborhood traditional banks having the big problems, while mortgage companies and non-CRA banks would be exempt. The opposite is true.

Fourth, most CRA loans are well-documented, traditional type mortgage loans, not the no-doc, low-doc and adjustable-rate garbage which is where the problem lies.

Fifth, an analysis of CRA impacts released in January concluded that “To a much greater extent than other lenders, CRA Banks avoided making the types of home purchase mortgage loans that provoked the foreclosure crisis.”

That same study found that banks covered by CRA were more than twice as likely to keep loans on their own books rather than sell them to Wall Street. In Atlanta, CRA banks retained 51 percent of mortgages to low and moderate-income borrowers, while non-CRA lenders kept only 20 percent of those loans, shipping 80 percent off to Wall Street.

So those non-CRA lenders were the source of the problem.

[bobbolink]

15. CRA? Translation, pleez.

[bunkerbuster1]

16. Community Reinvestment Act of 1977.

Sorry, should've spelled it out.

More here

http://en.wikipedia.org/wiki/Community_Reinvestment_Act

It's at the root of the "why we lendin' money to colored folk?" whining on the right.

They haven't got a clue of what they're talking about, of course.

[bobbolink]

20. Thank you.

"Sorry, should've spelled it out. "

Just once, at the top. :hi: I gave up trying to memorize all the alphabet thingies. :)

[goodgd_yall]

18. I heard 1995 mentioned

as a year where something supposedly significant happened. I didn't catch what it was, but that's why Clinton is getting blamed.

[bunkerbuster1]

27. It's covered in the wiki entry...

And there's an analysis that concludes that, if anything, the CRA actually helped to mitigate the crisis:

http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf

Our study concludes that CRA Banks were substantially less likely than other lenders
to make the kinds of risky home purchase loans that helped fuel the foreclosure crisis.
Specifically, our analysis shows that:
(1) CRA Banks were significantly less likely than other lenders to make a high cost loan;
(2) The average APR on high cost loans originated by CRA Banks was appreciably lower
than the average APR on high cost loans originated by other lenders;
(3) CRA Banks were more than twice as likely as other lenders to retain originated loans in
their portfolio; and
(4) Foreclosure rates were lower in MSAs with greater concentrations of bank branches.

[goodgd_yall]

30. Yes---Number 3

A lender is not going to take on a risky loan if it is the one who will suffer the consequences of default.

[KamaAina]

26. Sixth, banks have ways of skirting the intent of the CRA.

I remember when my local bank in New Haven was bought out by a much larger NY bank. The new, improved NY/CT bank had only two offices in the area, both in downtown New Haven. Yet its CRA statement boasted of its lending activities in New Haven County, which includes wealthy suburbs and shoreline communities. Never mind that CT has had no county goverment since 1961!

[ThoughtCriminal]

9. Just in case you need a debunk doc

http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf

- CRA loans constituted only 22.8% of all loans and 9.2% of high-cost loans
- CRA Banks were substantially less likely than other lenders to make the kinds of risky home purchase loans that helped fuel the foreclosure crisis.
- CRA loans were less likely to be foreclosed upon than other loans.

Compared to other lenders in their assessment areas, CRA Banks were less likely to make a high
cost loan, charged less for the high cost loans that were made, and were substantially more likely
to eschew the secondary market and hold high cost and other loans in portfolio. Moreover,
branch availability is a key element of CRA compliance, and foreclosure rates were lower in
metropolitan areas with proportionately greater numbers of bank branches.

---

The data blows away the claim. The only thing that the people advocating this talking point can prove is that they are racists.

[goodgd_yall]

21. Thanks

You'd think if CRA loans were the villain, this meltdown would have happened way before now.

[CatWoman]

10. uh huh

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4081028

[tjwash]

12. Yep..."that train's never late!"-- Chris Rock

nt

[Liberal In Texas]

13. Yeah, this has been around for awhile. Logic for the non-thinking.

I suppose RW hate radio is keeping this meme out there for the lemmings.

And very racist at is core. It suits them to a T.

[riverdeep]

14. I heard Senator Oren Hatch make the claim that this is really the fault of, wait for it-

Bill Clinton! He said this all started on Bill Clinton's watch when he passed the dereg laws. He forgot to mention it was Phil Gramm that originated the bill. Or that Republicans have thwarted any attempts by Dems to introduce sane regulation of the markets for the past eight years.

They want to either shift the blame to the Dems or at least muddy the waters for the American public into thinking 'they both do it'. Unfortunately, they do both do it, but the Pubs do it much more often and with greater vigor. Our blue dog Dems too often side with them.

[goodgd_yall]

17. I agree about the muddying of waters

I'm hoping the time is right for Democrats to feel it's OK again to regulate corporations and financial institutions.

Yeah, it cracks me up---not only blaming minorities but that the problem isn't too little regulation but too much! They are so invested in having us believe that a free market works, unfettered by sensible regulations.

[spanone]

23. bwahahahahaaaa.....

[ProfessorGAC]

28. Yeah. And It's Completely Wrong

I've heard it too. The problem is that it never happened!

The changes to the law to encourage mortgage lending to lower income folks, was to lower the threshold at which a mortgage would be written.

So, instead of setting a limit of $80k before a bank would write a mortgage, rather than a HELOC or a simple collateralized loan, the law encouraged banks to lower that number to something more like $50k.

What the banks did instead, was to develop exotic ARM's that would encourage people to borrow more than they could actually afford, because they didn't want to be bothered with mortgages of $55,000. They wanted to lend $150k or $200k because they would be easier to bundle and sell off as large packets of 3.5% investments which would reprice to 10 or 12% in 4 years.

The law did not encourage the banks to increase their risk! That's not what happened. The banks did this on their own.
The Professor

[lifesbeautifulmagic]

29. yes, i posted about this last night, and it dropped like a two ton lead balloon

I think our dem leaders need to get proactive on this, and condemn this language in the strongest possible way. This is fear and hate mongering of the worst order, and it could get out of control to tragic consequences.

[goodgd_yall]

31. You're right

When they are on the various cable news programs they need to address this fallacy being passed out by the RW and bigots, even if not asked about it. They need to be proactive.