In a story today, The New York Times tries to explain the subprime lending crisis and why so many minority mortgages ended up in default. But full disclosure would have implicated the Democrats.
The paper notes that there have been higher default rates for blacks and Hispanics than whites. That’s because, in the boom years of mortgage lending, minorities were more likely to get subprime loans. The Times reports that in 2006, 17.5% of white homeowners got subprime (below the prevailing interest rate) mortgages, compared to 52.8% of blacks and 44.9% of Hispanics.
Because these were loans to borrowers who — in many cases — lacked the ability to repay them, when they defaulted, it had a ripple effect on the housing market and the banking industry.
The Times neglects to tell us the political origins of the crisis. It was the paper’s favorite party that forced these risky practices on lenders.
In 1977, Congressional Democrats decided that low rates of minority homeownership were due to discrimination. With the Community Reinvestment Act, they insisted that lending institutions had an “affirmative obligation” to meet the “credit needs” of the communities in which they were chartered
Regulators begin using minority lending as a criterion for approving mergers, acquisitions and branch openings. All of this exerted enormous pressure for banks to make high-risk loans.
In 1992, Democrats pressured the federal lending giants Freddie Mac and Fannie Mae to purchase bundles on these loans, encouraging more risky lending and putting Freddie and Fannie in jeopardy.
When regulators began worrying about the position of the duo, Democrats like Senators Dodd and Schumer, and Congressman Frank, insisted that all was well in lending land.
In other words, the Democrats’ race obsession and determination to apply affirmative action to mortgage lending led to the eventual collapse of the subprime house of cards. Because the Democratic Party’s fingerprints are all over the catastrophe, The New York Times refuses to point the finger of blame.
@nytimes.com
