Mark Steyn, sounding positively Burkean, on the origins of the financial crisis:
… isn’t it the case that we’re in this mess because US politicians previously subordinated “the general reason of the whole” to “local interests” and “local prejudices”? That’s to say, with their usual casual destructiveness dressed up in the baby talk of “diversity”, they chose to turn the mortgage industry into just another branch of the affirmative-action racket. The United States government in effect decreed credit a human right rather than a privilege judiciously granted by one independent contractor to another.
Mark Steyn writes:
>>>”That’s to say, with their usual casual destructiveness dressed up in the baby talk of “diversity”, they chose to turn the mortgage industry into just another branch of the affirmative-action racket.”
Typical right winged reaction:
“Got a problem? It’s all the (insert derogatory racial or ethnic slur)-s fault.”
OK.
Let me quote a recent article by John Ridley, a man John Rosenberg chose to quote a while back… (inserting a derogatory racial or ethnic slur).
http://www.discriminations.us/2006/11/a_black_mans_comments_on_nrs_n.html
…entitled, “Conservatives Race Bait the Economic Meltdown”:
>>>”So, let’s look at some facts. Over at the Heritage Foundation — a conservative think tank — Ronald D. Utt, Ph.D. wrote a prescient article in June of 2005 with the no-beating-around-the-bush title: Time to Reform Fannie Mae and Freddie Mac.
Fannie and Freddie being two lenders at the heart of Wall Street’s financial reckoning. In the piece, Dr. Utt notes that the government must act to “reduce financial market risk and taxpayer exposure.”
Where is that risk coming from? According to Utt:
“Despite its claims to the contrary, Fannie Mae’s basic operating procedures do not target any particular type of buyer/borrower….Nine percent of the conventional conforming loans made by the private mortgage market were to first-time minority homebuyers. By contrast, only 4.7 percent of Fannie Mae loans and 3.5 percent of Freddie Mac loans over the same period were to first-time minority homebuyers.”
Bear in mind the minority population in America is 34 percent.
Again, for clarity: According to a conservative writing for a conservative Think Tank (I would add, using stats from the U.S. Department of Housing and Urban Development, “New Housing Goals for Fannie Mae & Freddie Mac in 2005-2008″), at the head of this crisis only nine percent of loans in the greater market place went to minorities. Four-point-seven and 3.5 percent of the “risky” Fannie and Freddie loans went to minorities.
In both cases more than ninety percent of available loans went to good, old-fashioned, non-minority WHITE folks.”
http://www.huffingtonpost.com/john-ridley/conservatives-race-bait-t_b_129653.html
Fascinating.
Of course, there are many right wingers who won’t let these FACTS get in the way.
–Cobra
Barack Obama had no problem with this little program. In fact, he received over $100,000 in campagn funds from Fannie Mae/Freddie Mac. Where was he to pull the brakes on this crisis? He didn’t notice, didn’t care?
“…only nine percent of loans in the greater market place went to minorities.”
No, 9 percent went to first-time minority homebuyers. The other 10 percent went to non-first-time home buyers of all types. It says so right in the article. John Ridley is misquoting his own reference. And the reference (which is quite good) has no relevance to Michelle Malkin’s point.
The only important data are: “What is the breakdown of FORECLOSURES by income group?” No one disputes that the crisis started because of lending to people that did not meet the income standard. ACORN has been encouraging banks to make precisely these bad loans.
Dom,
Michelle Malkin’s point was to try to blame this crisis on illegal immigrants. Steyn’s point was try to blame this crisis on “affirmative action” (non-whites getting loans).
Both are proven wrong by the statistics.
Dom writes:
>>>”No one disputes that the crisis started because of lending to people that did not meet the income standard.”
Well, actually…there is some dispute.
>>>”On Sunday, as it reported on the bailout bill negotiations in Congress, Fox News continually explained that ACORN and other community groups pushed for government regulations that caused the foreclosure crisis, citing this Wall Street Journal editorial as a source.
In the end, the proposal for money for housing groups was dropped, confirming that most lawmakers probably agreed with that theory — which has taken hold on the Internet, in conservative circles and in the business press. Last week, Investor’s Business Daily ran a front page story: “How a Clinton-era Rule Rewrite Made Subprime Crisis Inevitable.”
The only problem with all this: it’s completely wrong.
Neither the Community Reinvestment Act — the law most cited as the culprit — nor other affordable housing goals set by the government forced Fannie, Freddie or any other lender to make loans they didn’t want to. The lure of the subprime market was high yields and healthy profit margins — it’s as simple as that.
“The rest is a lie — and it’s industry propaganda,” said William Brennan, director of the Home Defense Program of the Atlanta Legal Aid Society, who, in 1991, began raising the alarm over predatory lending in poor neighborhoods. “It’s also racist.”
Popular belief now holds that government regulators ordered Fannie and Freddie to buy more loans made to low-income borrowers, and that housing advocates applauded the agencies’ move to enter the subprime market. In fact, the exact opposite is true, Brennan said…”
“…Fannie and Freddie were huge players in the subprime market, buying 48 percent of all subprime-mortgage-backed securities offered in 2004 — way above anything they would ever need to meet affordable housing goals. They continued to buy loans made to multi-family dwellings, as in the past, to satisfy regulators.
Despite claims to the contrary, the two did not rely, for the most part, on subprime securities to meet their regulator’s goals. In any case, the majority of subprime loans were refinancings, which wouldn’t have counted anyway.”
http://washingtonindependent.com/9127/low-income-borrowers-made-scapegoat-amid-crisis
I know that’s a lot to digest, Dom, but the majority of sub-prime loans were REFINANCES, not first time home buyers.
Couple that with a DECREASE in household incomes, inflation, and 600,000 jobs lost this year alone, you see the recipe for disaster. Remember all those fun discussions we used to have here at Discriminations about housing segregation in Michigan?
>>>”Irvine, Calif.-based RealtyTrac determines the ranking by comparing the number of households in a metro area with the number of foreclosure filings, which include notices of default, auction sale notices or bank repossessions.
In all, 72,616 filings on 41,273 properties were reported in the Detroit metro area, which includes Livonia and Dearborn. The foreclosure rate represents a 68 percent jump from 2006, RealtyTrac said.”
http://blog.cleveland.com/business/2008/02/detroit_leads_nation_in_forecl.html
Livonia, as I noted back then, is the “whitest city in America.”
http://www.detnews.com/specialreports/2002/segregation3/a01-401080.htm
These statements are a two-fer, Dom.
There were plenty of white people in Livonia who had good jobs in the Auto industry. Those people were forced into foreclosure when the jobs disappeared.
–Cobra
“Both are proven wrong by the statistics.”
More proof that while Cobra can recite meaningless facts, he can neither understand their importance nor reach logical conclusions. Steyn believes that the desire to increase loans to minorities led to reduced standards for everyone. So the fact that only a portion of the defaults are from minorities is completely irrelevant to his argument.
Below is the first paragraph of a 1999 NYT article describing the change:
By STEVEN A. HOLMES
Published: September 30, 1999
“In a move that could help increase home ownership rates among minorities and
low-income consumers, the Fannie Mae Corporation is easing the credit
requirements on loans that it will purchase from banks and other lenders.”
So the purpose of reduced standards was clear and understood, and only with the costs now coming due are the Democrats and their allies attempting to rewrite history.
MJ writes:
>>>”Steyn believes that the desire to increase loans to minorities led to reduced standards for everyone. So the fact that only a portion of the defaults are from minorities is completely irrelevant to his argument.”
What you’re saying is that facts and statistics be damned, this is all the fault of minorities just like Steyn believes.
Now, you’re free to have that opinion, of course, but if you question my “understanding” and “logic” when I show FACTS which DISPUTE that opinion, it only reflects poorly on YOU and those who harbor anti-minority views like Steyn.
–Cobra
Cobra,
Your “facts” amount to claiming water is wet and therefore 2+2=5. Noting your conclusion is false doesn’t mean water isn’t wet, and your saying so 50 times is just childish.
Let me also correct your statement. This is the fault of politicians who (1) think the laws of economics don’t exist (2) think they know better than anyone how business works, (3) think the economy is something which magically creates money for them to spend, and (4) think they can get something for nothing. It’s more than a little offensive to have someone as ignorant as you try to put words in my mouth. For you next strawman, please try harder.
People who believe minorities deserve the same treatment as everyone else have nothing to be ashmed of. It is you and all who demand that others accept second class status who deserve to be reviled.
MJ writes:
>>>”This is the fault of politicians who (1) think the laws of economics don’t exist (2) think they know better than anyone how business works, (3) think the economy is something which magically creates money for them to spend, and (4) think they can get something for nothing. It’s more than a little offensive to have someone as ignorant as you try to put words in my mouth. For you next strawman, please try harder. ”
I just disagree with you, sir. Politicians didn’t do anything that Business Lobbyists didn’t lobby for them to do. It is not a strawman argument. It’s how things get done in Washington, and I defy you to present facts that prove me wrong.
MJ writes:
>>>”Steyn believes that the desire to increase loans to minorities led to reduced standards for everyone. So the fact that only a portion of the defaults are from minorities is completely irrelevant to his argument.”
It’s perfectly and completely relevant to this argument. The right winged “let’s-try-to-help-John-McCain’s-sinking-campaign” talking point is to try to blame the entire economic disaster on black people and community organizers (wink wink, “Golly, that sounds just like Obama”).
The truth?
>>>”Vicki Miller bought her childhood home in Altoona, Pa., from her mother’s estate for $32,000, using a nice, traditional mortgage from the local savings and loan.
Seven years later, her debt has more than doubled, her once-significant equity has shrunk to zero and she’s behind on her payments. The lender has begun to threaten foreclosure.
“I grew up here. My son grew up here. And I had hoped my grandchildren would grow up here,” Miller said woefully.
Miller said she was persuaded to refinance her mortgage twice into sub-prime loans she didn’t really understand, along with taking out a second mortgage. As such, she reflects what experts say is the true face of the sub-prime mortgage debacle.
Discussion of the problem often focuses on first-time home buyers who stretched to buy homes they couldn’t afford. But experts who’ve crunched the numbers say 90% of people who took out sub-prime loans from 1998 to 2006 were already homeowners.
Many, like Miller, had conventional, prime loans that were well within their means. What often got them into trouble was that they refinanced their mortgages without really understanding the terms and without realizing that the sales pitches and loan documents were sometimes deliberately opaque to snare the unwary.
The result is thousands of cases like Miller’s, in which the damaging outcome is clear but it’s very difficult to figure out how it happened or exactly who’s to blame.
“I should have just stayed with the loan I had. I realize that now,” said Miller, who earns a modest income as an office worker. “I’m not mortgage smart. I’ve since become mortgage wiser.””
http://articles.latimes.com/2008/jul/05/business/fi-refi5
I get that right wingers never want to discuss what’s occuring in the heartland. They find it hard to demonize people like Vicki Miller. But you folks are going to have to face these facts during this economic tragedy.
The “Susan-Smith-blame-it-all-on-the-black-guy” trick ain’t working this time, folks.
–Cobra
Cobra,
First, I realize you’re a borderline illiterate one-trick pony, but no one except you can read my post and conclude I’m blaming minorities. I’m blaming politicians who don’t understand economics or business.
Second, your statement that “Politicians didn’t do anything that Business Lobbyists didn’t lobby for them to do.” is so obviously incorrect it’s funny. Politicians adopted “regulations” to force businesses to lend to people they would not have otherwise lent to. What evidence (forget proof) do you present to back up your claim? None. I previously posted a NYT article clearly describing the goals of the adopted policies. If you choose not to educate yourself, and you clearly have, it’s not my responsibility to remedy it.
The ultimate problem creating the financial crisis was the willingness of government bureaucrats to effectively guarantee poor mortgages through FM/FM. These entities purchased loans with poor repayment probabilities because the government adopted regulations telling them to. Only when mortgage originators realized FM/FM would buy virtually any mortgage did the sub-prime industry escalate. And why did effective government agents offer to guarantee loans to poor credit risks?
(1) It wasn’t their money.
(2) It helped the economy (then).
(3) Obviously they hoped everything would work out fine.
(4) They knew they would be called anti-poor.
(5) They expected to be long gone by the time the losses became apparent.
(6) They knew they could blame someone else anyway, and people like you would support them.
At most you can say I am criticizing both (a) the practice of delegitimizing opposition by calling everyone who disagrees with a leftist policy racist, and (b) the culture which celebrates such tactics. To which I say: correct.
MJ writes:
>>>”Politicians adopted “regulations” to force businesses to lend to people they would not have otherwise lent to.”
And if you don’t think that civil rights groups, and fair business organizations didn’t “lobby” politicians to adopt regulations that fought REDLINING and discriminatory lending practices, I’m not the person who needs education here. And YES, I’m not afraid to the use one prominent name of the current RNC/hate radio/blogosphere/talking point–ACORN, was one of those groups.
MJ writes:
>>>”The ultimate problem creating the financial crisis was the willingness of government bureaucrats to effectively guarantee poor mortgages through FM/FM. These entities purchased loans with poor repayment probabilities because the government adopted regulations telling them to.”
If you want to believe that’s the whole story, sure. Some people call chicken grease “gravy.”
But I’m not going to allow the readers to ignore the fact…and I will repeat it AGAIN, that the vast majority of the first-time homebuyers with sub-prime loans were WHITE, and the vast majority of the sub-prime loans themselves were RE-FINANCES bought by people who had traditional mortgages already.
Why is this significant?
Because if you paid any attention to recent IRS reports, you’ll find that the median income of all Americans is around $32,000 a year. (Not just minorities, folks)
Second, wages are stagnant in America, and hasn’t kept up with inflation and the rising costs of living. For the vast majority of Americans, MJ–any major purchase is done via credit. So even a person with a TRADITIONAL mortgage, like Vicki Miller in the LA Times piece, may have to refinance not just to try and secure a lower rate, but based upon events beyond their control, ie. the roof needs repair, flood damage to the basement, unforseen legal costs, and/or medical bills not covered by health insurance.
There’s other sides to this, where the easy money, interest only, jumbo mortgages were a boon for gold-miners, house-flippers and urban gentrification moguls who tried to game the system by betting that the housing boom (or crooked appraisers) would jack up the value of their new property before the adjusted interest rate kicked in, allowing them to sell for big profit.
http://www.nydailynews.com/news/2008/01/20/2008-01-20_house_flipping_scammers_continue_swindli.html
That’s AMERICA, MJ.
Nobody “forces” people to buy a mortgage. But the bundling of mortgages to be bought and sold as a commodity on the international market had absolutely NOTHING to do with poor minorities, civil rights groups or activists, and those who wish to try to SELL that nonsense are going to get called out on it.
–Cobra