Several days ago, Neil Cavuto, host of Fox News' Your World, proclaimed, "Loaning to minorities and risky folks is a disaster." On WorldNetDaily, a compendium of loopy half-truths, pundit Drew Zahn declared that "when federal regulators demanded parity between racial groups in lending, the only way to achieve a quota would be to begin making intentionally bad lending decisions." The conservative National Review Online trotted out a favorite whipping boy, the Community Reinvestment Act, claiming that the legislation was the result of "racially inflammatory campaigns" that forced banks to "make mortgages available to people without much in the way of income, assets or credit."The CRA option has the bonus of pinning blame on black people and Bill Clinton! But, hah, none of this is true, at all. The CRA just affected banks and thrifts, which are regulated. "The heart of the crisis was caused by unregulated and lightly regulated mortgage brokers and independent mortgage bankers and affiliates that are not subject to the CRA," says law professor Michael Barr. Tyler Cowen puts it thus: "Did policies such as the Community Reinvestment Act significantly worsen the housing bubble and the subsequent collapse? Basically not, although in my view these were bad policies for other reasons." There's your talking point, and he provides some supporting evidence. Our favorite debunking comes from Ta-Nehisi Coates:
I know very little about economics, but I know quite a bit about people. 1.) Folks who use single cause logic to explain gigantic complicated phenomena are almost always lying, ignorant or children. 2.) Folks who peddle victimology for giants ("the banks were forced to do it") while decrying the victimology of individual humans ("the white man forced me to do it") are also usually just lying. The Blame The Negroes (BTN) theory satisfies both criteria.He goes on from there on the "ugly history" of the sort of argument the CRA thing represents. As always, he's worth reading. But, of course, through the fault primarily of greedy lenders, many of the worst subrime loans went to minorities. ("The Center for Responsible Lending, a nonprofit research group, examined 50,000 subprime loans nationwide and found that blacks and Hispanics were 30 percent more likely than whites to be charged higher interest rates, even among borrowers with similar credit ratings.") So the crisis hits homeowning minorities disproportionately (culture of ownership!). A good, serious, liberal 'bailout' bill would renegotiate the terms of those mortgages and keep those homeowners out of foreclosure. The Paulson bill didn't have that, but the Dodd-Frank-Paulson bill had some (arguably mostly cosmetic) provisions to protect homeowners. Still, the bill was largely seen as more helpful to Wall Street than, in the memorable words of last week's Weekend Update, Martin Luther King Boulevard. Black members of Congress felt pressure to oppose the bill from Black talk show hosts and their constituencies, because the bill was seen as, you know, welfare for rich whites while they get nothing. And, hilariously, the white right-wing voters who called on their GOP Members to vote against the bill presumably now think the money was needed to bail out the blacks who got us in this mess. And the Jews who own the banks! So the Congressional Black Caucus voted 18 pro, 21 against the bailout bill. Which is not quite decisive but it's still telling. And did work on the Bailout bill really need to stop completely during the Jewish holy days? Even leaving aside the important work of Banking Committee chairman Barney Frank, Jewish congress members voted 20 in favor and 9 against, so presumably their absence would've made the final vote even more decisively against. (Remember, of course: Black and Jewish congressmen are more likely to be Democrats, and thus more likely to support the bill to begin with. And keep in mind also regional differences!) SO to sum up, a Democratic bill needs more Black support to win without Republicans, who we should probably just give up on because they think Black people are to blame for this.