Others have pointed out the "Blame the Community Reinvestment Act for the financial crisis!" meme growing in volume in various right-wing echo chambers.
I had an experience this morning that leads me to believe that we may not be taking it seriously enough. (Please join below.)
I was out doing the normal Saturday morning errands (kids to soccer, running to the grocery, etc.) and was angered to hear the following on NPR's Weekend Edition Saturday, Scott Simon interviewing a trader:
"Ultimately, Valdes blames the current chaos on housing, citing reform legislation passed nearly 20 years ago by the Department of Housing and Urban Development. "That legislation was passed in '89 by a Congress who felt that you could just lower standards for lending and everything else would be OK," he said. "It's great if it works, but it really doesn't work."
Valdes, of course, is mis-identifying the Community Reinvestment Act.
For letting that slide by unchallenged Scott, I say to hell with you, and to hell with your Cubbies, too.
But this has been happening a lot - on NPR alone. Brad DeLong's blog pointed me to this the other day, from Rick Perlstein:
I had an interesting experience on the radio this past weekend. It might have been a telling one—I'm not sure.
On Friday I went to Chicago's public radio station WBEZ to tape a discussion on the week's news for American Public Media's show Weekend America. My co-panelists were comedian Dana Gold and comedian conservative congressional staffer Tara Setmayer. We were asked about the financial collapse. I said it was the fault of the conservative ideology of deregulation. She said it was the fault of Jimmy Carter. Because he passed what she misidentified as the "Community Reinvention Act."
So what did I do in that Chicago radio studio last Friday when a wingnut (who, incidentally, is African American) spewed forth some excrement about... how handouts to swarthy people are responsible for the meltdown of the American economy? I did my job. I called it a "lie and a slander," explaining in simple and forceful terms that lending institutions covered by the CRA have a lower mortgage default rates than ones that aren't, and that even if the former were the worst companies in the history of the universe, they wouldn't have helped produce the financial contagion had not conservative deregulation green-lighted the buying and selling of insanely irresponsible mortgage-backed securities.
Then we moved on to the next topic...
Then, the next day, waiting in the drive-through line at a Burger King, I heard myself on the radio. But not my debunking of the right-wing smear. That part was cut.
What happened? My experience with Weekend America in the past — this segment on the evolution of Richard Nixon's "silent majority rhetoric" — was great; it seems a perfectly typical public radio production, liberal enough in that milquetoasty, NPR sort of way. And the reason a conservative lie was allowed to stand could have been perfectly innocent: perhaps the audio of my debunking was garbled by crosstalk. Perhaps they cut without a second thought, just for purposes of time; my stint in the recording studio was twice again as long as the completed segment, so they had to cut somewhere.
But it's also possible that the producers' thinking could have gone something like this:
He said: "it's the conservatives' fault." She said: "It's the liberals' fault." Both drew political blood in equal measure, and the canons of fairness and balance demand we leave it at that, rather than let the liberal sneak in the last word: "He said, she said"—snip, snip, snip.
Which would be a splendid illustration of how conservatives launder lies across our political discourse. Textbook, actually. No malice aforethought on the part of the media gatekeepers; just an overcautious commitment to the value of what they call "balance" over the value of Truth with a capital T.
Which is just how the right might be able to get away with making the 2008 presidential election a referendum, for millions of low-information voters, over whether minorities should be able to get away with taking over all the instruments of federal power and writing checks to each other, or whether they will be stopped before it's too late.
Perlstein puts his finger on the genie that is now out of the bottle: our leading media kittens are now being handed a gift-wrapped "balance" security blanket that will allow them to try to "balance" the fact that Republican philosophy, policy and practice (slipping things into bills in the dead of night, gross incompetence in watchdog roles) are 98% to blame for the financial melt-down, with the myth that "maybe, though, it was all caused by Democrats trying to please nefarious minorities."
I started looking around the web for more on this, and see The current Bill Moyer's Journal has also focused on this point:
BILL MOYERS: There've been a lot of voices on cable channels recently blaming this bubble, this crisis, the cause of all of this catastrophe we're in right now, on poor people who took out mortgages that they couldn't afford to buy home they wanted. They shouldn't have. Watch these clippings and tell me what you think about them.
LAURA INGRAHAM: 1995 when Bill Clinton decided to tell, you know, Robert Rubin to rewrite the rules that govern the Community Reinvestment Act and push all these institutions to lend to minority communities, many very risky loans, that was a noble idea, perhaps, but that certainly wasn't following free-market principles.
NEIL CAVUTO: I don`t remember a clarion call that said, Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster.
LARRY KUDLOW: It's time for the Congress, Republicans and Democrats, to stop encouraging, exhorting, and forcing banks to make low income loans with no documentation. Stop that. The community reinvestment act which was passed in the mid nineties, which was extended in the early 2000s, literally pushed these lenders to make low income loans.
BILL MOYERS:Lending to minorities and risky people. Do you see this, are they seeing this as issues of race and class?
EMMA COLEMAN JORDAN: Absolutely. And it's a cynical manipulation. It's reprehensible. And, in the worse tradition of Lee Atwater, and the-
BILL MOYERS: Lee Atwater.
EMMA COLEMAN JORDAN: -Willie Horton ad, to use race as a wedge issue to make people who pay their mortgages believe that the people who are getting the benefit of the 700 billion dollars, that we're being asked to pay, are poor, minority people who caused the crisis.
This is unconscionable. This problem is not a problem that was caused by the Community Reinvestment Act. The data is very clear that the Community Reinvestment Act loans were being offered in a way to people that were much more responsible and had none of the characteristics of default that are being attributed in this discussion. And what this does is to say, this problem is a problem that was caused by black people.
And it means that it gives an opportunity to bring up that old wedge. But I think the people in the country are smarter today. I just don't think it's going to fly. I think that people understand that the enemy is not a person who got a home loan and was tricked into getting that loan by a fast-talking broker who originated the loan but that the problem was the securitization process, the high leveraging that Wall Street was doing, the lack of regulation.
I don't share Ms. Jordan's optimism. Reagan's political success in the 1970s and 1980s was largely built on the myth of the "Chicago Welfare Queen" - the narrative of minorities stealing middle class jobs and living high on the public dole, even as record numbers of blue collar workers were facing unemployment (particularly in the midwest), and as family farms all but disappeared.
These were the so-called "Reagan Democrats" who bought these racist appeals, were afraid of the "bear in the woods", and have never really come back to the Democratic Party.
George Bush I extended the coded racism ploy with the suggestion that, essentially, if Dukakis won, black men would come rape you. Lee Atwater predicted, with a twinkle in his eye, that Willie Horton would become a household name.
Despite their continued slide, Republicans have not wavered from their traditional go-to tactic of trying to insinuate that minorities are a dangerous threat to the American way of life.
So, a few points from The Campaign for America's Future about the CRA, for those who might be running into desperate right wingers looking to blame the crisis on minorities (note: the version at the linked web site has links to sources for some of the facts below):
Myth: The Community Reinvestment Act forced banks to make loans to all low-income families and people with poor credit, fining banks that refused to comply.
Fact: The Community Reinvestment Act has encouraged banks to lend fairly and responsibly for over 30 years. The Community Reinvestment Act does not impose fines; it periodically examines FDIC-backed banks and issues them a CRA-compliance rating. To receive a high rating, banks must meet the financing needs of as many members of their community as possible and must not discriminate against racial and ethnic groups or certain neighborhoods. However, a bank cannot receive a high rating unless it is also maintaing "safe and sound banking practices."
In other words, the CRA requires banks to lend to working-class families and people of color, but only when those people have been deemed credit-worthy.
Myth: In 1995, Bill Clinton changed the Community Reinvestment Act to allow the securitization of CRA and subprime mortgages.
Fact: The 1995 revisions to the CRA changed only the way in which a bank’s CRA compliance is evaluated; they made no mention of mortgage securitization. Under the 1995 rules, banks are rewarded only for making mortgages in their communities, not for re-selling mortgages as securities.
Myth: President Bush and Senator McCain tried to stop the subprime mortgage crisis, but Democrats blocked their efforts.
Fact: Bush and McCain supported the Federal Housing Enterprise Regulatory Reform Act of 2005, which would have created a new government agency to oversee Fannie Mae and Freddie Mac and other federal housing programs. However, the bill would have done nothing to stop the rash of subprime lending that preceded the housing bubble because it provided oversight for only Fannie and Freddie, not for the companies that issued subprime mortgages.
Here's the one I think is most important:
Myth: The housing bubble burst when too many people with home loans mandated by the Community Reinvestment Act failed to make their mortgage payments.
Fact: More than half of problematic sub-prime loans made in the last few years were issued by banks that are not regulated by the CRA. The CRA applies only to financial institutions that are insured by the FDIC, but not to independent mortgage companies such as Countrywide. In fact, non-CRA lenders were twice as likely as CRA lenders to issue excessively expensive subprime loans to vulnerable creditors. Responsible mortgages made by CRA lenders have a low rate of foreclosure similar to that of traditional mortgages.
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It is more clear than ever that the economy is what this election will be about. Lets make sure every voter clearly understands that Republicans are to blame - and not just John McCain but every GOP House member and (especially) every GOP Senator who has shoveled this deregulation supply-side shit on us for the last 25 years.