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Posts Tagged ‘Community Reinvestment’

Steve Sailer and others have observed how the combination of changing demographics, Bush’s commitment to an “ownership society,” cheap dollars, securitized mortgages, and the emerging importance of the relatively obscure Community Reinvestment Act, were major factors that in combination render the housing crisis a “diversity recession.”

Critics have countered that a lot of other factors, including rampant speculation and “greedy executives” were far more dominant factors.  Perhaps those are important factors too, but banks don’t generally lend money to losers without some external factor.  After all, as Obama liked to tell us not too long ago, these are the evil guys that invented red-lining.

Consider this chart:

cra-commitments-by-year-small2

That is some big bucks, with an order of magnitude jump right before the big bubble.  Ahuge percentage of foreclosures are substandard Alt-As and Subprime loans lent in part to avoid discrimination suits by the likes of people like Obama.  The fact that the CRA funding went from a paltry sum of several billions for two decades and jumped to several trillions in CRA funding for poor, minority homeowners right before the big bubble came on the scene, it’s hard to say that this factor is being overstated by mean conservatives who don’t believe in equality.

You’re damn right we don’t believe in equality when it comes to banks lending money.  The banks were supposed to be discriminating, not on racial grounds, but rather discriminating against bad credit risks! Concerning oneself with equality of outcome when different groups have different credit-worthiness, different habits and cultures of saving, and different levels of earnings is economic suicide, as WaMu and so many others have found out. Such new progressive banks “made history” all right, just not quite as they planned.

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