Make no mistake about it: We are headed for a massive economic crash. The basics are much, much worse than Bush wants to admit. It may take a bushel basket of money for that "dollar menu" recommended by one of our two vice-presidential hopefuls.
What's terrifying is that the Republicans appear determined to follow the example of the Nazis, who found a minority upon which to heap the blame for the disaster that followed our mismanagement of WWI reconstruction. The problem is, most Americans don't recognize the "dog whistles" that are being emitted by the Republicans right now. People may recognize the vague references to "minorities" who get loans by known bigots like Sean Hannity, but they probably don't remember the references.
Here's the party line:
As a source of the current subprime mortage mess, economist Larry Kudlow and Wall Street Journal editorial board member Steve Moore point to the Carter-era Community Reinvestment Act (CRA) of 1977, which purported to prevent "redlining" -- that is, the denial of mortgages to minority borrowers -- by pressuring banks to make home loans in "low- and moderate-income neighborhoods."
The implication is that Jimmy Carter made it illegal to deny home loans to people who couldn't pay them back!
Only that's not quite true--The Carter-era law prohibited "red lining" areas--denying on the basis of skin color, not ability to pay. In point of fact, only about 3 percent of the toxic mortgages that are in question right now are held by minorities. The majority of them are actually held by "flippers," would-be entrepreneurs who followed those infomercial methods to "get rich quick" and about sixty percent of them actually would have qualified for regular 30 year fixed mortgages.
Only, there was one problem--the mortgage brokers got higher commissions for the ARMS, so they never even mentioned the possibility of a real mortgage to many of their clients because they got higher commissions for ARMS.
Yet it is so much easier to just "dog whistle" that this is a problem of minorities! It would be so much more convenient if they were all just renting lousy apartments from rich Republicans.
The attempt to weave the crisis into the ongoing attempt by Republicans to win the election through blatant racism isn't new:This was actually from February:
Perhaps the greatest scandal of the mortgage crisis is that it is a direct result of an intentional loosening of underwriting standards - done in the name of ending discrimination, despite warnings that it could lead to wide-scale defaults. ...
In an earlier newspaper story extolling the virtues of relaxed underwriting standards, Countrywide’s chief executive bragged that, to approve minority applications that would otherwise be rejected "lenders have had to stretch the rules a bit." He’s not bragging now.
There's actually only one cure for this sort of technique--it's calling them out! Day after day, loud and clear, whenever something comes up like this. There is actually no relationship between ethnicity and this crisis. The only effective response is to listen carefully and throw it back, whenever it comes up.