Sounds almost naughty. “Curious about foreclosed properties?” Click here for discrete information you can read in the privacy of your own home/apartment/ cardboard box.
I got this gem of an email the other day from a local real estate outfit. They’re trying to put as pretty a face as possible on the subprime debacle, and as a fellow marketer I can’t really blame them.
Speaking of blame, though, there’s something I’ve got to get off my chest.
There’s been this interesting thought cruising through the conservative ranks related to who’s really to blame for the mortgage meltdown. Unsurprisingly, they think it’s dark people.
Here’s how it works. In 1977, Congress passed and President Carter signed into law the Community Reinvestment Act (CRA), which forced banks to serve underserved communities. Typically, that meant poor- and moderate-income minority neighborhoods. Conservatives say that if not for this piece of regulation, banks wouldn’t have been forced to offer mortgages to colored folk who couldn’t afford them, and none of the subsequent capitalistic implosion would have happened.
I laughed the first time I heard that, since it was obviously concocted by some young white person. I’m old enough to remember that prior to anti-redlining laws like the CRA, banks could legally discriminate against minorities with impunity. And it’s not like that sort of discrimination has been eradicated – it’s just moved a few inches under ground.
I was prepared to write the theory off as one that would only appeal to the loony right, until I heard George Will utter something similar on the TV show “This Week” this week. While I am under no illusion that George will be reading this, I feel the need to respond now that an honest-to-goodness conservative thinker thinks this is plausible.
1) Why so long? If the CRA forced innocent banks to lend to those inconsiderate and undeserving black people, why did it take 30 years for the mortgage crisis to erupt? The easy answer: there’s no correlation.
2) The CRA specifically instructed banks to use the same criteria in evaluating loan-worthiness for poor people as rich people. E.g., if two people have good credit scores and income histories, you don’t get to say “no” to someone who lives in a bad neighborhood and “yes” to someone in a good neighborhood. So to the extent that Joe Suburb was offered a Ninja loan, Joe Inner City had to be offered one as well. I have no idea why the inner city folk are being singled out, when one suburban mortgage that implodes can be worth as much as 5 of those in the city.
3) I’d be more willing to accept this notion of “the government forced us to loan money to coloreds” defense if, at any time from 2002-2006, any mortgage originator had stood up and said, “Hey, investment folks, I know it looks like we’re making billions of dollars here, but we’re writing a lot of bad paper. The government has forced us to write loans we know are worthless, so be careful.” I don’t remember hearing that from anyone, do you?
4) Similarly, I’d be more willing to blame dark people for this mess if they’d had anything to do with the mortgage derivatives or securities that actually caused the financial meltdown. See, having a mortgage you can’t pay used to be an issue for only you and your bank. You defaulted, and your bank owned your asset. Suddenly, in this century, under this president (i.e., not last century, under Carter), it got a lot more complicated with people bundling huge swaths of mortgages and selling insurance against the possibility of those mortgages going down in value. All the cool kids on Wall Street did it, making billions in the process. We know now that what they were doing was pure, unadulterated gambling. And they lost. Guess what — you don’t get to blame the plastics company for supplying the raw material used to make the dice you used to lose your shirt at the craps table.
5) Subprime borrowers do share a measure of the blame. Not a huge measure, but a measure. If you make $50,000 a year, you have no business trying to live in a $300,000 house. I’m sorry your high school economics class didn’t prepare you for that little bit of truth.
But seriously, conservatives need to man up. Personal responsibility doesn’t end when you bundle a lot of personal irresponsibility and sell it to some dupe who resells it to some other dupe. If you think the market can do no wrong, and the government can do no right, you need to own this crisis — and don’t go blaming poor people or begging taxpayers for help.