Jackson Free Press

Just hours after the Dow closed Monday down 777 points, a JFP reader posted the "reason" for the financial crisis on our Web site: "The subprime mortgage gateway was led by Democrats (Carter, then Clinton) insistent on the theory (while noble) that everyone should be able to buy a home. Not everyone can." This sounds innocent enough. But it is vital to read the fine print.

Over the last week, as Business Week reports, national Republicans have been looking for a way to blame the meltdown on Democrats. The talking point they've chosen to spread is not only inaccurate, but it has a racist subtext.

Their excuse is that Democrats caused the crisis by giving mortgages to poor minorities, especially through the Community Reinvestment Act passed in 1977 on Jimmy Carter's watch and which has stayed in place through every administration since. Supposedly, all those people of color helped by "Carter, then Clinton" caused this disaster because they couldn't keep up their mortgage payments.

National Review is pushing the trash: "The CRA empowers the FDIC and other banking regulators to punish those banks which do not lend to the poor and minorities at the level that Obama's fellow community organizers would like."

Adding insult to injury, Republicans this week extended the not-so-subtle race-based attack to ACORN, a community organizing group that has fought for housing rights right here in Jackson: "ACORN, for which Obama worked, is one of many left-wing organizations that spent decades pressuring banks and bank regulators to do more to make mortgages available to people without much in the way of income, assets, or credit," National Review declared.

The rumor that today's meltdown goes back to 1977 (and to Obama and ACORN) has no basis in reality. Business Week is trying to clear up the mess, declaring that the "Community Reinvestment Act had nothing to do with subprime crisis." The CRA is "a 30-year-old law that was actually weakened by the Bush administration just as the worst lending wave began."

Be clear: A regulated agency giving home mortgages to non-white Americans is not the same thing as risky lending practices adopted by under-regulated lenders. As other readers pointed out: The loans that caused the current crisis were made between 2004 and 2007. The vast majority 80 percent of the loans behind the meltdown came from entities not covered by CRA, which does not require banks to make loans that are unsafe or unprofitable. Unlike the lenders behind the current mess, federal laws require that CRA lending activities must be done consistent with safe and sound banking practices. We have a subprime financial system. It is not about Hispanics and African Americans buying homes they couldn't afford, as one reader wrote.

Please don't believe the racist hype.

Note: The two JFP comment threads that alerted us to this disgusting talking point are here and here

Previous Commentsshow

As promised earlier. Will be in the paper tomorrow, too.

DonnaLadd

Sep 30 2008

Foegive me if this was posted elsewhere: Article title: Bachmann Blames President Clinton, ‘Blacks,' And ‘Other Minorities' For Current Financial Crisis The link has a video also. Quote: Yesterday in a House hearing on the financial crisis, Rep. Michele Bachmann (R-MN) spoke on what caused the situation. To make her point, she read from an article called "How A Clinton-Era Rule Rewrite Made Subprime Crisis Inevitable," written by Terry Jones in the right-wing publication Investor's Business Daily. The article criticizes the Community Reinvestment Act (CRA) for pushing "Fannie and Freddie to aggressively lend to minority communities." Jones goes on to say that Clinton was misguided to push "homeownership as a way to open the door for blacks and other minorities to enter the middle class." Her response to the criticism: "It was an unfair characterization of my remarks," the 6th Congressional District Republican said of a published item in Roll Call newspaper. "I read a portion of an article critical of the Community Reinvestment Act, which I'm not a fan of. They were not my words." .... The intentions of the 1977 Community Reinvestment Act and its expansion under the Clinton administration to increase minority home ownership were good, Bachmann said. But by relaxing standards for qualifying for mortgages, the act contributed to today's financial mess and could hurt minorities in the long run, she said. "It may in the future inhibit ownership for minorities and communities of color," she said. "It does not mean that I'm a racist ... because I'm critical of that bill." Bachmann may have been "just" quoting Terry Jones, but how does that quote make her look?

LatashaWillis

Sep 30 2008

The business media are continuing the effort to debunk this racist GOP talking point. Thomas Frank today in the Wall Street Journal: On economic questions the standard exculpatory maneuver is even simpler. When some free-market scheme blows up, one needs only find an institution of government in close proximity to the wreckage and commence accusing. Thus we hear from some on the right that the disaster on Wall Street was the handiwork not of those with unbridled pecuniary motives but of Fannie Mae and Freddie Mac, which were government-sponsored enterprises and therefore partially exempt from market discipline and of theoretical necessity the sole culprits. There is no doubt that Fannie and Freddie enabled the subprime neurosis, but for certain conservatives they are virtually the only malefactors worth noting. The dirge goes like this: Fannie and Freddie were buying up subprime mortgages, and they were doing it for (liberal) political reasons. Mortgage originators thus had no choice but to hand out mortgages like candy. Had market forces been in charge, loans would, no doubt, have been administered with a rigor and sternness to make John Calvin blanch. I asked Bill Black, a professor of economics and law at the University of Missouri-Kansas City and an authority on the Savings and Loan debacle of the 1980s, what he thought of the latest blame offensive. He pointed out that, for all their failings, Fannie and Freddie didn't originate any of the bad loans -- that disastrous piece of work was done by purely private, largely unregulated companies, which did it for the usual bubble-logic reason: to make a quick buck. Most of the mistakes for which we are paying now, Mr. Black told me, were actually made "by four entities that under conservative economic theory should have exercised effective market discipline -- the appraisers, the originators of the mortgages, the rating agencies, and the investment banking firms that packaged the subprime mortgage-backed securities." Instead of "disciplining" the markets, these private actors "served as the four horsemen of the financial apocalypse, aiding the accounting fraud and inflating the housing bubble." It is they, Mr. Black says, who "turned a crisis into a catastrophe." Ah, but truth is no ally to a conservative with his back to the wall. So much more helpful are the trusty narratives on which the movement was built. So when we have dispatched this first canard, we learn from other conservatives that it is the sub-prime people who are to blame; that by taking out loans they couldn't possibly pay off, these undesirable borrowers have ruined us all. There is no way to measure the number of people who took out mortgages they knew they couldn't afford, of course, but for what it's worth, a 2007 report by the Mortgage Bankers Association reports that the FBI estimates "80 percent of all reported fraud losses arise from fraud for profit schemes that involve industry insiders." That means the lenders, not the borrowers.

DonnaLadd

Oct 1 2008

Also, folks, we need to get a conversation going about the purpose of the CRA: to end redlining against minorities, which is a primary reason we have an imbalance of wealth today. It's truly remarkable that people with college degrees would try to turn that into a bunch of people getting mortgages through that program that didn't deserve them. That is so racist (and/or ignorant) that it makes my head spin.

DonnaLadd

Oct 1 2008

The United Methodist Church references the imbalance of wealth in its official statement on the bailout/rescue: http://www.umc-gbcs.org/site/apps/nlnet/content2.aspx?c=frLJK2PKLqF&b=3455813&content_id={77DCEB5E-B06D-41BD-8DAF-378D7574665F}¬oc=1

FreeClif

Oct 1 2008

Thanks for the link, Whitley. I like this part: Because the number one cause of personal bankruptcy is due to health-care expenses, its reform is an urgent priority. People are using their financial resources to pay for health care due to lack of coverage and are therefore unable to pay mortgages on their homes. Regulation of Wall Street is needed to restrict and regulate credit default swaps and to ban predatory mortgage and credit card lending. The financial bubble has burst. Corporate greed must be replaced by the biblical mandate of stewardship. All we have is ours "on loan" from God to be used for good in this world. John Wesley's mandate to "do no harm" is violated when we prey on the vulnerable.

LatashaWillis

Oct 1 2008

Like Sarah Palin, I also believe in the devil. It is a stanic tendency among a certain segment of elites in this country to ALWAYS blame the victims instead of those who sit at the top and reap the profits of national disasters that they create. A good example is the Iraq war. There was no good reason for it. They like to march around with their flags and flag pins, accusing others of not being patriots. They are driving his country into the earth with their warped ideology that worships something that does not exist --- magical free markets --- like lucky charms --- magically delicious (who needs regulations?).

FreeClif

Oct 1 2008

Slightly off-topic, but this Bachmann woman is also the kind of person Joe McCarthy would love. I witnessed this exchange on Chris Matthew's Hardball last Friday: Republican Congresswoman Michelle Bachmann (Minn.) accused Barack Obama Friday of holding "anti-American" sentiments. "I'm very concerned that he may have anti-American views," Bachmann said on MSNBC's Hardball. "That's what the American people are concerned about. That's why they want to know what his answers are." "In his book, Barack Obama had pointed to Jeremiah Wright as one of his mentors and also Father Pfleger as one of his mentors. Two of the three mentors are Father Pfleger and Jeremiah Wright. Now, these are very strange, anti-American mentors," Bachmann continued. "Barack Obama has been associating with anti-Americans, by and large – the people who are radical leftists. That's the real question about Barack Obama." Bachmann said that Republican vice presidential candidate Sarah Palin's assertion that Obama has been "palling around with terrorists" was a "fair comment." The Minnesota Republican also insisted that several members of Congress have an "anti-American nature" though declined to name any. http://www.youtube.com/watch?v=Vbw4pdxVSOg

Jeff Lucas

Oct 21 2008

Right. I've avoided posting about her because she is. just. too. damn. stupid. It would be shooting fish in a barrel, and she's not running for national office, so I'll save my energies for the race that we can all vote in. That said, the GOP now has two vicious women nationally accusing half the country of being un-American because we don't believe with two female tools of the radical right. I say: Bring it on. We need all this hate laid out in front of the American people so they can't pretend it's not there. And it's a clarion call for the Republican Party to go into hiding for a while and get its house in order. When they stand up and kick out all the hateful people, instead of defending them, then they will be a party to be reckoned with. As it is, they've flushed our country into a toilet for sport and greed, and American is sick of it. This chick can take her McCarthy-esque rants and stick them where the sun don't shine–right beside Sarah Palin's wink-wink efforts to get "her" country to vote against Barack Obama because he's black and, thus, must be a friend to terrorists. Oh, and McCain's buddy/fundraiser G. Gordon Liddy will be there, too, muttering about shooting law enforcement agents in the head in order to miss their bulletproof vests. Bring it on, girlfriendz. We are ready for your kind.

DonnaLadd

Oct 21 2008

How about Palin, Coulter, Michelle Bachmann, Bay Buchannon, Kaye Bailey Hutchinson, Michelle Malkin, et al. What crazy a__ nutjobs! I see why Palin is a so-called star to so many. The country is full of nutty broads just like her. The repugnant party has screwed up the republican woman beyond repair quite likely. And to think she's supposed to be educated and refined! This is what happens when you gleefully align yourself with, and blindly follow a bunch of patriarchal, imperialistic, capitalistic white supremacists who have annointed themselves as superior to God and all mankind. To make a long story short, the republican woman is just like the republican male - a selfish bloodsucking predator.

Walt

Oct 21 2008

After the election, whether Obama wins or loses, watch them all say there's no more racism in America because any black man, or any woman, can aspire to the highest office in the land.

HardTravelin

Oct 21 2008

After the election, whether Obama wins or loses, watch them all say there's no more racism in America because any black man, or any woman, can aspire to the highest office in the land. Which is why my cousin says she will not vote for Obama. And as far as Michele Bachmann is concerned, according to Chris Matthews, her challeneger raised more than $700K since she made her comments.

golden eagle

Oct 21 2008

I wonder why McCain didn't pick HER for his VP? She is rightwing nuttier than Palin - she could have been an even better base energizer. And as far as Michele Bachmann is concerned, according to Chris Matthews, her challeneger raised more than $700K since she made her comments. Isn't it cool that her ramblings raised thousands for her opponent? She should never have ventured out from under her rock.

Jeff Lucas

Oct 21 2008

To which I say she's a typical repugnant republican hailing from Nutbush City Limits. For a period of time, far too long and equally unjustified, all a republican had to do was run for office and spew the typical republican mumbo jumbo policies or talking points, and the average likewise full of crap republican voter would look upon the candidate in a messianic fashion, and vote for him or her as if they had family values, integrity and good intentions that were automatic or innate, no matter how hard the facts spoke otherwise. This is how a country of multiple races, cultures, parties and interests can go stone nuts and flirt with disaster so quickly. With the repugnant party, racism, hate, lying, stealing, fronting, frauding, nutdom, etc.. are not strikes against your sanity, integrity or purity, but are mere characteristics to embrace for enhancement when it's available and to overlook or deny when they backfire and harm you.

Walt

Oct 21 2008

Can she see Russia from her back yard? If not, then not enough foreign policy experience. Shooting moose is good too, you betcha. Oh, she is not an energy expert like Palin either.

FreeClif

2008-10-21T12:19:02-06:00