Josh Marshall, quoting Jackie Kucinich of the Daily Beast, last night, on what really matters about Trump’s “shithole” racism:
The words are terrible. The attitude and mindset is terrible. But what is really important, much more than the words is that this attitude and strategy are embodied in the White House’s policies. That’s what matters.
As his Administration lurches from one demonstration of racist assholery to another, it’s important to keep in mind that it is not only racist words seeping out of this Administration, but its blatantly racist policies as well.
Imagine having a great credit score and being denied for a mortgage just because you live in a low income neighborhood.
Redlining, the refusal by banks to lend to poor and minority communities, was so common decades ago that Congress passed the Community Reinvestment Act in 1977 to prevent it.
For years, banks have been fighting these requirements to lend to underprivileged people -- and President Trump is listening as he continues his war on regulation.
The Trump cabal has shown itself to be nothing more than a dull-witted rubber-stamp for industry lobbyists and their wish-lists, and the Banking industry is no exception. Under current law Banks are barred from discriminating in their lending practices against people who live in low-income neighborhoods, those made up disproportionately by people of color. In other words, Banks can’t only “cater to the rich,” or those who they perceive as “rich.”
The Community Reinvestment Act was passed in 1977 in response to the practice of "redlining," a term derived from the Depression-era practice instituted by the 1930’s Home Owners Loan Corporation which drew actual, red-ink, "red lines" around maps of those neighborhoods disfavored for lending purposes, invariably made up of racial minorities who (at that time) were subjected to ingrained, legal, and institutional racism. Banks adopted the HOLC’s “red lines,” with the practical result of locking African-Americans and other minorities out of the housing market for decades, and thereby keeping them from building wealth for their childrens’ futures.
This, in large part, was how poverty in this country was created and perpetuated.
The CRA has stood well for over four decades. Under the CRA, banks are "graded” based on how much they are willing to lend on credit for mortgages and apartments in low-income areas, as well as how many branches they provide to those areas. “Bad grades” affect their ability to effect mergers and conduct other potentially lucrative activities.
But In the aftermath of the Great Recession--which they themselves caused--those Banks suddenly found themselves still hamstrung by these “pesky regulations” as they gravitated to more affluent—(read “white”) customers. As the economy began to recover, these banks increased their percentage of “jumbo” mortgages to well-heeled homebuyers, and cut back on their lending to low-income people. But complying with the CRA has blocked them from completely exiting the less profitable low income market.
The Trump Administration has given them an ideal opportunity to “modify” this law that impacts their bottom line. What their powerful lobby, the American Bankers’ Association—supported by Trump’s Treasury Secretary, Steven Mnuchin-- wants to do now is “relax” these “outmoded” regulations in order to allow them to receive credit under the CRA for so-called “infrastructure” projects, business loans and “educational” programs. The bottom line of these proposed “revisions” to the CRA would be to allow the banks to take resources away from actual lending to low-income citizens. As might be expected, the prime motivation here for the Banks is profit:
The reason for offering fewer mortgages in low- and moderate-income communities and more loans of other types would be profit. Current mortgage rates run around 4.25%. Interest rates on small business loans can easily approach 5.5%.
Market rates on infrastructure loans can reach 7%, according to the EPA.
The Banks also want to take advantage of the fact that --again, because of the financial crisis they caused—fewer people can afford to own a home, and have to rent instead. Private equity firms made a killing buying up distressed, foreclosed properties in the aftermath of the Great Recession. Such firms, like Blackstone, are then able to sell the properties through their own mortgage companies. Banks have been cut out of that action, in part because of the compliance requirements of the CRA. Erik Sherman, writing for Forbes magazine puts it simply: “Banks want to make more money and CRA compliance gets in their way:”
[G]iven the falling rates of mortgages to minorities and the heavy moral debt the country owes to those who have been wronged for so long, enabling banks to further extract themselves from ensuring equal and fair access to mortgage lending is a wrong direction. But hardly the first one we've seen over the last year, and not the last.
Predatory lending and discrimination in housing haven’t “gone away,” as evidenced by this recent lawsuit against Wells Fargo for steering African-Americans into costlier, high interest mortgages in Philadelphia. These are the types of subtle, under-the-radar, but enormously impactful “deregulatory” actions that can wipe out peoples’ lives, dreams, and futures, even though they don’t garner the headlines of a Trump tweet.
That’s what matters.