Just saw Keith Olbermann opining that it’s racist to blame the mortgage crisis on a rules change that encouraged the making of riskier loans in order to attract black customers; this, proclaimed Keith, is the equivalent of “blaming the crisis on black people.”
Um, no it isn’t. If the law forces you to make risky loans to black people that you wouldn’t make to white people, it’s the fact that the loans are riskier, not the fact that the recipients are black, that causes the problem. If the law had mandated lower risk standards for left-handed borrowers than for right-handed borrowers, that too could lead to a greater number of risky loans – and pointing that out would not constitute prejudice against left-handed people.
Mind you, I don’t think affirmative action in the lending market is anything like a major cause of the mortgage crisis; and focusing on that as opposed to more fundamental institutional problems might itself be a symptom of racism – but it hardly need be.
Even though I agree with Olbermann on some things, mostly Iraq-related, I find him and his alter ego, Rachel Maddow, to be among the most insufferably bigoted people on television. Not once that I am aware of have they had a serious free-market advocate on their show. They’d rather — at a safe distance — refer to anyone who is skeptical of government intervention in the economy as though he were mentally retarded. Of course, they have missed the boat on the current financial turmoil. I’m not surprised he plays the race card. That’s so Keith.
The Community Reinvestment Act is not the prime culprit for the mortgage problems, but only a contributing factor. That distinction belongs to the general program of diverting money to the banking and construction industries through policies that made lax lending standards profitable.
Maddow is more open-minded than Olbermann; for example, she had Bob Barr on her show. (To be sure, you and I don’t consider Barr a “serious free-market advocate,” but by mainstream standards he is.)
[...] Of course the Federal Reserve is not solely to blame; there are still further government policies that encouraged riskier loans. There’s been some media attention paid to Clinton-era changes in the Community Reinvestment Act, for example, that encouraged laxer lending standards in order to attract minority borrowers. The claim that this explanation is “racist” is confusing the reason why a given loan is risky with the reason why the loan, despite its riskiness, gets made; all the same, focusing on this narrow example misses the wider picture, which is that when the federal government sponsors massive credit corporations like Freddie Mac and Fannie Mae, it creates an expectation (whether codified in law or not) that the government is guaranteeing their solvency. Just as with the S&L crisis of the 80s, the expectation of reimbursement in the case of failure encourages riskier loans because the risk is socialised. (And beyond this are the still deeper factors that stifle affluence for the vast majority and so make it necessary for them to borrow money to buy a home in the first place; taking that necessity for granted requires justification.) [...]
It’s not like inner city people were snapping up and flipping homes left and right. If we’re going to blame a class besides the ruling one, middle and upper-middle class borrowers are going to get the finger in my book.
Olbermann is going to become a big pain in libertarians’ collective asses, I predict – he’s not O’Reilly, but he’s got a lot of the same swagger and self-righteousness about him (he just couches it in a sort of Cronkite-ish authoritative demeanor).
Not once that I am aware of have they [Olbermann and Maddow] had a serious free-market advocate on their show
Maddow has since had Ron Paul on. She’s much more willing to talk to — I mean “talk with” — people she disagrees with than Olbermann is. (Olbermann talks to them all the time. He even calls them “sir”!)