The Atlantic - Latest Comments in Are the Negroes responsible for the state of the economy?

Re: Are the Negroes responsible for the state of the economy?

guru42101 — Mon, 29 Sep 2008 14:28:56 -0000

I worked for 3 years in the mortgage industry. The main cause of the problem is not the people getting the loans. It is the mortgage companies lowering requirements to get more loans. As well as not managing their risk levels.

Generally speaking when doing loans of a given credit score and debt to income ratio you can calculate an estimated default rate. You build that default rate into the interest rate. So if you expect 1% of the loans of a given qualification type to default, then you add 1% to the interest rate to mitigate the losses.

There were a lot of mortgage companies out there selling loans that people would likely not be able to afford at interest rates below the break even point given expected default rates.

Another big problem was qualifying individuals based on the current index for variable rate loans. We qualified all of our loans on an inflated interest rate. So even when indexes were at 4.5% we were qualifying you assuming the index would raise up to 10% (20 year high is 13% in the early 90s). That way even if rates increased, as we knew they would, we were sure you could make your payments. A lot of companies were not doing this.

The whole hedge fund crap is because of the above two points. The ratings for those loans were horrible so they were packaged into funds and insured to then give them higher grades (from F to B or A).

Generally speaking the poorer people were not at fault. They were lied to. I and the company I used to work for do not want to see a bail out. We want to see investigations, charges, and arrests. The historical payments is on the 5B for a reason and was quite often glossed over by mortgage companies.

A lot of these loans were not predatory in the standard sense. They were predatory in the sense that broker A gets paid on a per loan basis and once that loan is off his books he doesn't care if it lives or dies. So, the customer was mis informed so that broker could get one more loan.

The only customers that are to blame were a large number of individuals who were knowingly over spending or over investing. Mostly real estate investors attempting to flip houses. The problem is that most of them had their credit rotating so much that they were borderline lying to the mortgage companies. Technically they were safe as long as they could keep selling houses at a profit. But when prices plateu they were screwed and defaulted on a large number of loans. In a sense they were all operating a pyramid scheme and home prices could only go up so far before they are too expensive. Once home prices hit that point they started feeling the squeeze.

Re: Are the Negroes responsible for the state of the economy?

Jon H — Sun, 28 Sep 2008 16:08:05 -0000

The problem wasn't minorities.

23 dead people in Ohio were given mortgages.

The whole business was flipped on its head. The customers were the institutions with giant wads of cash to invest in "safe" mortgage backed securities. The business was to generate mortgages to serve those institutional investors. The borrowers' role in this was similar to the role tuna plays in the catfood business.

Because the whole point was to generate mortgages, bundle them up and slice them into the financial equivalent of scrapple, call them "safe high-rated debt", and sell them off as quickly as possible to bigger fish (local shady mortgage broker sells to regional bank sells to Bear Sterns sells to China).

That's why they ended up making loans to dead people. All that mattered was generating the loans and selling them out the back ASAP.

To the extent that minorities were involved, it's probably because they were seen as financially unsophisticated easy marks for bad loan deals and outright fraud. This especially goes for second mortgages and home equity lines of credit sold to the elderly, who would probably be particularly receptive to promises of cheap money.

At the end of the day, though, the lenders weren't offering no-money-down and other ridiculous deals in order to serve poor minorities.

They were offering those deals to attract borrowers of any income level, poor or not, to generate the mortgages to package and send on.

Re: Are the Negroes responsible for the state of the economy?

anonymous — Sun, 28 Sep 2008 11:24:23 -0000

Late to this, but I hope you read this one: do the math, dude.

The TOTAL amount sunk into bad mortgages of various sorts is about $250 billion. But the 'value' of derivatives banging around the world is around $45 TRILLION -- and while it's all webbed into the mortgage-backed securities crash, ya gotta be able to tell the loose doorknob from the house that's on fire.

Even if the residential real estate crash all evaporated to nothing (which it can't, cuz millions of houses are still worth something -- a house sold for $100,000 when it was bought for $300,000 is still worth 100 grand, and in five years, it might be worth 300k again), that's nowhere near enough to bring down the world's economy.

No, what's happening is very different: essentially, the mortgages themselves were a flimsy excuse for the securities. In a rising market, derivatives pretty much cannot lose money, so smart guys pooled thousands of mortgages and created trillions of dollars from a few hundred billion in home sales.

Since this whole structure is essential to the flow of credit for, well, everything -- buying a house, buying a car, the cards in your wallet, E-Bay, seed and inventory and mergers and you name it: it's important to know SCALE. This isn't about helping marginal homebuyers, it's about margins.

The thing is -- credit default swaps work out as the kind of scam that would have thrilled Meyer Lansky, especially cuz they're LEGAL. Essentially, a credit default swap is a bet somebody makes with an insurance company (like AIG) that, f'r instance, out of those thousands of mortgages in a mortgage-backed security pool, no more than a small, predictable # will go bad. In a rising market, it's a safe bet.

But once the housing bubble burst, credit default swaps became essentially like me buying theft insurance from you, on a car that I neither own nor drive. When I bought the insurance, we both agreed the car was worth, say, 50 grand. That's how you priced the policy: you figured out of a pool of 2,000 mortgages, no more than 50 would go bad. But now, the way I file the claim (the current market), you might have to pay me a million dollars for the stolen car -- and obviously I couldn't care less what happens to the car itself, since I only bought insurance on it: I don't own it nor drive it.

I'd have made money if 51 mortgages went bad. But if 300, or 1,000 of those mortgages go bad: I MAKE MORE MONEY OFF YOU. And, naturally, nobody wants to buy THAT contract from you -- and thus, you can't sell any more securities (if you're Lehman), write more insurance (if you're AIG), or make more loans (if you're Washington Mutual).

That's the essence of the imbalance here -- it wasn't the subprime market that caused the crash. If all we have to do is bail out the $250 billion in bad mortgages, we'd have done it by now.

It's the way trillions of dollars in derivatives, swaps and the like are now starting to cascade through commercial mortgages, mergers and acquisitions, lines of credit for inventory and car loans, etc., that makes this a crisis.

There was (and is) so much money to be made from the predictable collapse of the subprime market, that a more suspicious person than I might think that was why it was set up as the foundation of this extremely profitable house of cards in the first place.

Do the math.

Re: Are the Negroes responsible for the state of the economy?

professordarkheart — Sat, 27 Sep 2008 18:28:33 -0000

I've never subscribed to the nasty subprime lender theory. People have to be responsible when they sign their names.

I think this is an oversimplification. People taking out a mortgage have very good reason to assume that their mortgage lender is being straight with them; they know that if they can't pay the mortgage, the lender is screwed. It's not particularly irresponsible to place a fair amount of trust in the judgment of any entity that lends money for a living, because logic dictates that it must be smart enough to lend to people who can pay it back, or it wouldn't stay in business.

One of the factors leading to the meltdown is that the fundamental link between mortgage lenders' scrutiny of borrowers and their own financial well-being weakened, because lenders were increasingly passing their risk along by selling their mortgage debt in securities instead of holding it themselves. This change was pretty much invisible to borrowers; they had no way of knowing that the lender's interest in making loans that wouldn't be defaulted on had diminished, so they weren't appropriately suspicious. What used to be the lender's job, vetting the borrowers, had suddenly become the borrowers' own responsibility without their being informed of it.

None of this, of course, has anything to do with the CRA, which, as others have noted, applies only to federally insured banks (and to fewer of them since Bush weakened its requirements in 2005), and not to the independent lenders who were responsible for the bulk of the sub-prime loans. So while it's true that loans to minorities aren't a huge part of the sub-prime market, and that the CRA didn't create or expand the sub-prime market in the first place, it's also true that many of those minority or otherwise socially marginal borrowers who were suckered into bad loans were genuinely suckered, and not just chumps happily signing onto deals they should have known were too good to be true.

Re: Are the Negroes responsible for the state of the economy?

frankie d — Sat, 27 Sep 2008 17:25:50 -0000

it is the unfortunate reality that black folks will always end up being a convenient scapegoat whenever republicans want to wiggle out of responsibility for problems they helped to create and keep intact.

what is interesting is that it is still such a powerful weapon. reason should have dictated that it would have been rendered useless by this point. sadly, that is not the case.

Re: Are the Negroes responsible for the state of the economy?

MoeLarryAndJesus — Sat, 27 Sep 2008 16:52:56 -0000

Norah writes: "I spent literal days of my life arguing about how much a POS 1976 ranch style southern Californian or a 800 square foot Scottsdale, Arizona "with views" condo was worth."

From my own underwriting days my favorite story involves a proposed loan on a supposed million dollar waterfront property in Rhode Island. The comps were all great properties with ocean frontage - truly fine water views.

The subject property was on the water, too, and it was very much comparable to the other properties physically. But it had a slightly compromised view, seeing as how it was right across the bay from a fucking power plant. A huge, ugly, belching old dinosaur of a power plant.

The originating lender was pissed when I turned it down, too. Some people are just moronic greedheads who have no idea what they're doing. And since I was working with a bank that was buying/funding loans from many banks in a dozen or more states, I saw a lot of this sort of crap.

Re: Are the Negroes responsible for the state of the economy?

Norah — Sat, 27 Sep 2008 16:23:16 -0000

I worked in mortgage risk assessment for a bank, probably one of the only banks not suffering right now, and the sort of people who took the most risk in my opinion were yuppies (in a variety of colors, but primarily white). I spent literal days of my life arguing about how much a POS 1976 ranch style southern Californian or a 800 square foot Scottsdale, Arizona "with views" condo was worth. Underwriters were given stress counseling for having to argue with what we called "the $50,000 a year millionaires", such as one who cited having a BMW (on lease) as justification for why he should be approved despite being unemployed. The scary part about dealing with all these people was that they all already had mortgages; we worked on 2nd mortgages only. Someone had already approved these jokers for huge sums of money!

Most people were practical, but then most people weren't the problem. It was pushy banks luring in unfortunate people who thought they could pull it off, and the other 20% of the public who bought up "investment" new builds in the middle of absolutely nowhere. It wasn't a color issue, it was a greed issue.

Re: Are the Negroes responsible for the state of the economy?

Phil Deeze — Sat, 27 Sep 2008 15:30:39 -0000

If anyone is stupid enough to believe people like Ann Coulter on this, there's nothing you can do for them, but I recommend that if anyone meets a loudmouthed racist who will pin the economy's problems in minority borrowers who were underqualified for a mortgage, I'd ask that person to go to a well-to-do suburb of Washington, DC called Ashburn, Virginia. LOTS of white folks out there. And they are losing their homes by the dozens.

Most of them either lost tech jobs out on the I-66 corridor or, flat-out, tried to flip a second or third home and palm it off on a stupid buyer who just HAD to live in Ashburn and pay $600K for a fucking townhouse just so they could say they live in a nice school district near a Panera Bread and Harris Teeter.

Some of the minority borrowers that bought primary residences that lost them were trying to strive for that American dream that most were shut out of. They took a huge risk and lost their home, credit rating, etc. They didn't have Ann Coulter's respect even when they were paying their mortgage, so she can go to hell. Black folks were trying to keep a roof over their head in tough economic situations while these white folks were gaming the system by lying about their income, flat-out, just to get a SECOND home/rental property to use as an investment.

Minorities didn't make up the scheme that allowed the equity to be stripped out of "trade-up" homes on a systematic basis. Why do you think the beautiful people in this country like watching shows like "My Sweet Sixteen," "The Real Housewives of Orange County" or "Dr. 90210?" The equity in this country is being used by folks to buy bigger SUV's, live a dream lifestyle, bring in marble from Tucsany for their backyard pavers, or buy their bratty daughter a lavish birthday party replete with an appearance fee for Kanye West to perform.

I mean, sure, there are black folks livin' "ghetto fabulous" or athletes that flaunt their ice and rocks, but the real issue is that this home equity and securitization economy was a Ponzi scheme. I'm not going to sit here and allow ignorant folks to say "it's because minority borrowers got loans" and use that as the reason behind the collapse of the economy.

Re: Are the Negroes responsible for the state of the economy?

dougefresh — Sat, 27 Sep 2008 14:59:43 -0000

There was pressure on lending institutions to increase lending to minorities and lower income borrowers (regardless of race) and standards were relaxed which led to problems. Not because standards were relaxed to minorities, but because standards were relaxed to everybody.

Some Republicans wanted to increase oversight on fannie mae, but Barney Frank thought increased regulation would decrease affordable loans. This point of view was affirmed by Bill Clinton during the week.

http://cafehayek.typepad.com/hayek/2008/09/genetically-eng.html

Much of the relaxed standards were not just aimed at minorities, but lower income people of all races. Some did predict this might be a problem. Part of lower the standards probably worked out pretty well for many lower income borrowers. Those having so-so credit who could get a conventional mortgage rather than a subprime; therefore they a much better deal and would have less chance of defaulting because their mortgage payments would be lower. But relax them too much and you get too many high risk loans on the books.

http://ace.mu.nu/archives/274252.php

None of this is proves that loans to minorities caused this, but it shows that it wasn't just a matter of Republicans falling asleep on regulation. Which is one of the singular theories used by some on the left. I despise singular theories as well, especially in this case. Blaming race-based lending doesn't seem to even be on the table of what I would blame for this. I would think that low interest rates that created a boom and overvaluation is high on the list of factors, but certainly, a slew of other items influenced this mess.

I do a lot of personal tax returns, so I was constantly sending 1040's to lenders for people who had no business getting large mortgages, or any mortgage. Almost all these people were white so blaming minorities flies in the face of the evidence that I have seen. Bartenders who showed very little income got loans, people in cash businesses who didn't show much on their return got loans. A slight downturn in the economy or some poor decision-making on part of the home owner is all that is needed to throw them in trouble, especially if they were hardpressed to pay the mortgage under the best of circumstances.

Re: Are the Negroes responsible for the state of the economy?

MoeLarryAndJesus — Sat, 27 Sep 2008 14:22:29 -0000

MouseJunior writes: "Mortgages. Aren't. Complicated." And then provides an extremely simplistic comment that suggests to me he/she/it doesn't know what he's talking about.

Know what a RAM is, Junior? How about a neg-am mortgage? Under what circumstances should you accept a prepayment penalty? What are the margin and the index on an adjustable rate loan? What's a conversion option and how do you exercise it, and is there a cost?

Maybe you can answer these questions, but I would bet that 90% or more of experienced homeowners can't answer them all.

Re: Are the Negroes responsible for the state of the economy?

MouseJunior — Sat, 27 Sep 2008 13:59:05 -0000

None of us know that much about complicated financial transactions like mortgages.

Mortgages. Aren't. Complicated.

You borrow money. It needs to be paid back in a given time frame. It can be paid back in one of three ways: a fixed stream of medium-sized payments; a fixed stream of small-size payments followed by a very large payment; a stream of variable-sized payments offset from some floating rate. You can often pay money up front to get the interest rate lowered. There are formulas for determining what all of these things add up to in the end, and decades of information about what those floating rates have been in all kinds of situations.

This notion that mortgages are hard is one of the core myths that helped cause this whole mess. People convinced themselves that they couldn't possibly be expected to understand the contracts they were signing, so they abdicated the responsibility for doing so and gave it to salespeople, and now they're shocked, shocked they say, that foxes eat hens when left to guard the henhouse.

Re: Are the Negroes responsible for the state of the economy?

eric k — Sat, 27 Sep 2008 13:55:33 -0000

Besides the fact tha the program their trying to blame this on has been around since '77 and has a lower foreclosure rate than other loans, there is the bigger point. A bunch of sub prime mortgages failing is only a small part of the problem.

Of ocurse a bunch fo those risky mortages are foreclosures. That is built into the assumptions, that is why they are at a higer rate in the first place. The bottom line is if the going rate for "good" mortgages is 6% then about the only return you're gonna get is 6%. When you make higher risk loans you build in the assumption that a percentage will default so the interest rates are higher so that the overall average comes out to 6%. What happened here is a bunch of "genuises" (read scan artists!) figured out that they could repackage up those bad loans with some other stuff and hide them and resell them a couple times and make them look like they really did have an expected return higher than 6%. Everytime they resell them they make up a phony increase in the expected return and make profits. Basically they laundered them. Then they used those phony assets to buy other stuff (and pay themselves a bunch of hefty bonuses)

If a higher percentage of high risk mortages were failing than expetced but they were simply being held by banks expecting to get their 6% we wouldn't have this big crisis. Some banks would be making 3 or 4% overall on their loans instead of 6% but they'd survive and maybe some small subsidies to help people make their payments would prevent it widening. The reason it is a crisis is because of the greed that led to the scams. Of course if banks were simply loaning to some higher risk people and expecting to average a 6% return their wouldn't have been a bunch of guys getting rich.

The bottom line is whenever someone thinks they've found a way to game the system and get something for nothing there will eventually be a mess.

Re: Are the Negroes responsible for the state of the economy?

BD — Sat, 27 Sep 2008 13:41:42 -0000

Regardless of who took out the mortgages that are collapsing, the reason we're in bad shape is the bundling and reckless trading of the mortgage-based securities. Lehman Bros. and AIG were not issuing mortgages to anyone, of any race, of any credit rating, but they were all involved in trading these over-leveraged securities. Foreclosures are a big problem, but the fact that Wall Street became dependent on mortgages can't be blamed on the people who took them out.

It's a nice scapegoat, but it's silly to blame the homeowners for the complex machinations of traders. Even if laws were what made lenders give out risky mortgages (which the stories linked above pretty clearly debunks), there were certainly no policies forcing Wall Street to speculate on them.

Re: Are the Negroes responsible for the state of the economy?

MoeLarryAndJesus — Sat, 27 Sep 2008 13:38:17 -0000

John writes: "If the government wants to truly help Americans, they should freeze a low interest rate on all sub-prime adjustable mortgages. Who would suffer? Only the banks, whose profits would be lower than otherwise. A win-win."

You should listen to yourself when you say you don't know much about mortgages, John, because that suggestion makes no sense. If you have an artificially low limit on mortgage rates sources for those mortgages would dry up overnight. The whole point of the secondary market in mortgages was to make mortgages widely available.

As to the matter of this thread, I can say that the truly harmful policies in lending - Low and No-Doc loans, relaxing policies about how much equity people could take out in refinances, and so on - were all begun in order to cater to wealthier borrowers. People like to talk about mortgages solely in terms of purchasing houses, but the reality for many years has been that most mortgages are REFINANCES. People have been going to the well repeatedly to borrow money against rising home values. Once home values fell they couldn't do this any longer.

Twenty years ago cash-out refinances were generally capped at 75% of home value. But in the new marketplace this gradually inched up and people were being offered total cashouts. There were even oddball programs allowing you to borrow OVER 100% of value.

The sheer idiocy of blaming minorities for any of this should be apparent even to conservatives.

Re: Are the Negroes responsible for the state of the economy?

bonk — Sat, 27 Sep 2008 13:34:48 -0000

http://www.nytimes.com/2008/08/03/realestate/03mort.html?partner=rssnyt&emc=rss

"While subprime loans deeply penetrated low-income and minority groups, a new study suggests that more upper-income borrowers and more whites took out such loans than any other groups.

Compliance Technologies, a lending-industry consultancy, last month analyzed more than 1.9 million subprime loans originated in 2006, the height of the subprime lending frenzy, and found that roughly 56 percent went to non-Hispanic whites. Affluent borrowers, those with annual income at least 120 percent of their given area’s median income, meanwhile, took out more than 39 percent of the loans."

It goes on to say that minorities did make up a higher proportion of subprime loans that their overall proportion in all mortgage loans granted. Which makes sense, given the lower level of affluence that minorities have overall. Why, if it's true that shady lenders using predatory tactics were intentionally targeting poor people, you would in fact *expect* such a thing. But God knows the business community would NEVER do such a thing. No, the decent white economy has obviously been destroyed by careless negroes.

Re: Are the Negroes responsible for the state of the economy?

Zach — Sat, 27 Sep 2008 13:34:23 -0000

You don't have to dispute the underlying factual argument to attack this line of thought.

I honestly have no clue what the various regulations are as far as equal opportunity lending goes or affirmative action lending or whatever the fuck you want to call it, so let's assume this maximal, fictional case:

Strict Federal regulations require that for every 7 identical loans to White people, the exact same terms must be extended to 1 Black person and 2 Hispanic or Asian people, reflecting the racial make-up of the United States.

Even in the case of such a draconian implementation of Affirmative Action, it's still the bank's own damned fault if it goes out of business. They're in the business of calculating risk and offsetting it with enough sure bets, and if the government requires they take on an overly risky loan to some shady Black family for every seven safe loans to shiny happy White people, they simply need to raise the rates and/or fees to cover the risk of the whole pool. Big, fucking deal, right?

It's not the equal opportunity regulators' fault that folks rating and buying mortgage-backed financial instruments dispensed with due diligence.

Re: Are the Negroes responsible for the state of the economy?

Lisa — Sat, 27 Sep 2008 13:33:50 -0000

Yep, clearly an orchestrated rightwing talking point. I heard some pinhead make the same argument on Talk of the Nation (I think, maybe it was On Point) on NPR Friday and nearly swerved off the road in disgust and disbelief. Jim Wallis, founder of Soujourners, knocked that garbage down quickly -- but the damage is done, isn't it? When in trouble, blame the niggers. Always popular, always finds a home.

On numbers alone, the point is ridiculous. Not to mention morally obscene.

Re: Are the Negroes responsible for the state of the economy?

Charlotte K — Sat, 27 Sep 2008 13:29:18 -0000

There is a serious lack of financial literacy in this country, across the board. People got suckered into mortgage deals that were a bad bet from the beginning and depended on a non-sustainable market if they were going to pay off. Racists are seizing a typical opportunity (see that great Bill Maher clip for how to do it!)

It would be good if high schools would require "Family Living" classes that teach students how to budget and save for housing costs (and a lot of other practical information). I think owning your own home is a good goal, it's a safe investment if it's done correctly, and provides stability to community & families. Cities would do well to help poorer residents do so whatever their race (I went to wonderful educational sessions in Cambridge, MA, when I started thinking about it, and there were responsible loan programs for responsible low-income buyers). But there's a right way and a wrong way and people need education to know the difference.

Re: Are the Negroes responsible for the state of the economy?

JOhn — Sat, 27 Sep 2008 13:23:31 -0000

Before we throw these people under the bus, note this:

None of us know that much about complicated financial transactions like mortgages. We depend on our brokers to be trustworthy and lead us in an ethical manner when we make financial decisions. The breakdown was not American families reaching too far; the breakdown was unethical brokerages lying to those families about how much their loans would cost them monthly.

If a doctor told you to take a medicine, or have a surgery, for the most part you would do it. Because you trust the doctor to not lead you astray. But - what if the doctor was only doing surgery to get lots and lots of kickbacks from insurance companies? Not only would that doctor be in prison, but he would be villainized as evil.

These brokers are just like doctors. they had an ethical obligation to the families they served poorly which they did not meet. Before we blame these families please remember: when they got the mortgages, they were told monthly numbers THAT WERE IN THEIR BUDGET. And they weren't told that the mortgage could easily adjust upwards (in fact, would probably adjust upwards).

If the government wants to truly help Americans, they should freeze a low interest rate on all sub-prime adjustable mortgages. Who would suffer? Only the banks, whose profits would be lower than otherwise. A win-win.

Re: Are the Negroes responsible for the state of the economy?

Watson — Sat, 27 Sep 2008 13:22:43 -0000

banks were forced to give home loans to minorities

The force was applied by the banks, not by the minorities.

This is like blaming America's ills on Al Sharpton. If Rev. Sharpton were as powerful as the pundits claim, he would have been mayor, senator, or president by now. He ran for all three offices and couldn't even get the Dem nomination.

Re: Are the Negroes responsible for the state of the economy?

Fred Hapgood — Sat, 27 Sep 2008 13:12:32 -0000

This all would have happened even if the country was 100% white. Once the polity persuaded itself that "homeownership is the American Dream" it was just a matter of time. Maybe the presence of black mortage-holders moved the date of the crisis forward by a couple of weeks. But something like this was a statistical inevitability.

Re: Are the Negroes responsible for the state of the economy?

G Dub — Sat, 27 Sep 2008 13:04:09 -0000

You're right there are many instances in history when blacks were blamed for the mistakes and crimes of the larger society. A woman in SC drives her kids into a lake and her natural instinct was to say that a black guy did it. It's part of the culture for some people. There was a time when entire towns were burned to the ground and hundreds of people killed because of racial scapegoating. This kind of thinking has real world consequences

Re: Are the Negroes responsible for the state of the economy?

Steel7 — Sat, 27 Sep 2008 12:54:42 -0000

"It isn't about diversity or anything related to it. It is about greed. Subprime mortgages were given to borrowers, without appropriate underwriting, to generate mortgage-backed securities for Wall Street. It was the desire of Wall Street to create more mortgages than could be generated through appropriate underwriting because there was a market demand for these securities."

Bingo. Not aware of the China link, other than our fear of them calling in our debt. The first I heard of this theory was just yesterday- from a black college professor, who told us that it was due to a law that Clinton passed that required loan companies to give loans to people who would not otherwise qualify.

The whole thing was a scheme, which the regulations removed by "free market" apologists would have prevented, to generate profits for financial institutions. TANSTAAFL.

Re: Are the Negroes responsible for the state of the economy?

Green — Sat, 27 Sep 2008 12:49:16 -0000

Having bought a couple houses in the past half decade or so, my experience is that it was somewhat common for mortgage brokers to encourage clients who couldn't qualify to just make stuff up on their loan apps. Kept hearing "this is what bartenders and people who work on tips do all the time."

Anyway in my opinion unchecked greed is the primary driver of this crisis, some of it from mortgage brokers looking for commission and had no stake in whether the loans failed, some from speculators who wanted to become instant millionaires flipping houses who abandoned their properties half rehabbed when the market tanked, people who paid for phony appraisals to get loans they had no intention of paying back, and regular people just couldn't pay their mortgages.

The thing with those people is it isn't like they couldn't afford any house its that in most cases they bought more house than they could afford. So the idea that lending to black people or any people was the cause of the meltdown is bull. You lend somebody with subpar credit making 30-40k 100k for a starter house and everybody lives happily ever after. You convince that same person that they could somehow buy a 200k house for the same monthly payments, rinse repeat hundreds of thousands of times, and surprise surprise a few years later, your company is going under.

Re: Are the Negroes responsible for the state of the economy?

Kathy — Sat, 27 Sep 2008 12:45:37 -0000

This link to Sadly No, is quite amusing, but more importantly it links to some interesting information on the CRA (Community Re-development Act). That is the hammer the wing-nuts are using. CRA loans were only 23% of the home mortgages and have a lower default rate than the loans among the public at large. If you can wade through the study Sadly No links to, there is some pretty good info.

http://www.sadlyno.com/archives/11958.html