Democrats blame Republicans. Republicans blame Democrats. The lenders blame the government. The government blames the lenders. And, in the media, everybody blames poor people. Cut it out.
Poor people did not cause the economic crisis in this country. Think about that. They’re poor. They didn’t have any money in the first place, now they have less. Even if it’s a lot less, it’s not enough to account for the current mess we’re in. It ain’t 700 billion dollars worth of less. If poor people were buying substandard housing at fair market prices, even if they all defaulted on their mortgages, what’s the big deal? Let’s face it, if this whole housing mess only involved poor people and minorities, only poor people and minorities would care.
Sure, the laws on the books were exploited to the point that we’re in full economic free fall right now, but it’s the exploitation at fault, not the law or it’s intention. The Community Reinvestment Act’s stated purpose was a noble one. The worst it could be accused of being is “naively optimistic.” But then, Carter was president.
The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound banking operations. It was enacted by the Congress in 1977 (12 U.S.C. 2901) and is implemented by Regulations 12 CFR parts 25, 228, 345, and 563e. (See Regulation)
The CRA requires that each insured depository institution’s record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution’s application for deposit facilities, including mergers and acquisitions. (See CRA Ratings) CRA examinations (see Exam Schedules) are conducted by the federal agencies that are responsible for supervising depository institutions: the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS).
As I blogged about a couple of days ago, all you’d have to do is watch HGTV or any of the other real estate-oriented shows all over the airwaves and you’d have seen the problem unfold before your very eyes, starting years ago. Everybody got subprime loans. Young professional singles, couples, retirees, middle class, lower middle class, lower upper class, and a bunch of other categories and sub-categories of Americans in between, bought all kind of houses with 100% financing. No down payment is the norm. Very few of these shows feature unemployed minority families.
In fact, money was so easy to get, there was a rise in shows dedicated to home “flipping,” or buying houses just to sell them. Whole shows about whole companies dedicated to inflating the housing market for profit. This has nothing to do with poor people, minorities, CRA, ACORN or any other alphabet soup organization, in fact, house flipping takes advantage of low-income housing, since it means that before a family has access to a home, it has to be bought and sold twice. At a profit.
And don’t think that all these “flippers” could afford their “investment,” either. Most of them bought houses to flip with 100% financing and often faced the prospect of carrying 2 mortgages; one on the “flip” house, and their own home loan. All too often, they couldn’t sell the flip house in time to avoid selling at a loss, or worse, going into default. Yet nothing stopped them from trying again once they got out from under.
When seeing people play the “blame poor people” game, remember that “subprime” refers to the loan, not the recipient. Congresspeople and entertainers have faced losing their homes, too. An environment of unlimited credit, plus the illusion of unlimited opportunity created by profiteers benefiting from the hysteria over-inflated, out-of-the-ballpark numbers can generate put us in our current situation. The scam artists and con men on both sides of the aisle have gotten caught with their hands in the cookie jar and now want to blame their underpaid maids for making cookies in the first place. And, if that doesn’t work, those guys shouldn’t sell such nice stoves, or maybe people shouldn’t write cookbooks. But if you want to know who the real crooks are, you probably don’t have to look any further than the guys yelling, “Hey, it’s not my fault!”
Poor people did not make this mess.
They can’t afford it.
And they never could.
[...] one of a series claiming that anybody with access to Home and Garden TV should have seen the housing crisis coming years ago, since the network features a treasure trove of information about home buying, [...]
I agree with Cinie.
Thank you, Cinie! Even the liberal blogs have been playing this line. When “the poor” got subprime loans, they weren’t buying McMansions, just cheap houses in the same or marginally better areas than where they rented. It’s just not that big a dollar share of the market to sink the economy.
There have been plenty of stories in my local and other papers over the last few years of minorities in particular who had professional incomes, but were pushed into shaky financing vehicles. The lenders simply refused to offer them anything else. If you’re the first in your family to reach the position of affording a home, you often don’t have the background or confidence to push back and tell the lender to take a hike. Besides, if the whole industry is doing it, where else can you go?
Poor people can be as greedy as rich, but they’re always the first to have it catch up with them. It’s akin to the sad fact that if you rob a 7-11 of a few hundred bucks at gunpoint, you’re more likely to see jail time than a CEO who can keep his hands clean of weaponry but rip employees, customers and shareholders off for millions.
Tom, Sugar, the greed of the poor people in my opinion, is classic misdirection. Both parties are tools of corporate America. Look at who both candidates’ economic advisers are, Henry Paulson is from Goldman Sachs’ midwestern division (Chicago) and according to Chicagoans Against Obama, gave him a heads up on the bailout. William Daley sits on the board of JP Morgan Chase and is Mayor Daley’s brother and Obama’s economic adviser. Penny Pritzker, Jamie Dimon and Warren Buffet are too. I’ll blog about all that later tonight, but CRA, ACORN and all the rest of the things being pointed at are just convenient diversions from the truth.
At the heart of all of this is G-R-E-E-D–on everybody’s part. Including poor people with big eyes wanting more than they could afford.
I would not think that blaming poor people is the issue, it is blaming the politicians who think that using bad economics to buy the votes of poor people and reward supporters such as ACORN is the problem.
Just like the Republicans are whores at times to the corporate elite, so are the Democrats to the urban community organizers and the unions. They both sell out the best interests of the country for the sake of political sucking up.
Tom
PS Thanks for the link!