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Guess who caused the financial crash.
Greedhead bankers and Wall Street speculators? Nope. How about those boneheaded laissez-faire ideologues in Washington? Uh-uh. Instead – get ready for this – the culprits are poor people!
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This is the latest load of bunkum being fired at us by right-wing politicos and pundits. Trying to stop Congress from regulating Wall Street’s razzle-dazzle, ponzi-style investment schemes that have wrecked the housing market, banks, jobs, and so much more – the gooberheads of the far right are pointing fingers of blame at low-income homeowners.
The particular target of this nutty, right-wing campaign is CRA, the Community Reinvestment Act. Passed 30-something years ago, this law simply requires bankers to do a better job than they had been doing of making home loans to lower-income folks. But Wall Street’s frenzied apologists are claiming that banks were bullied by the CRA into making risky loans to borrowers who couldn’t afford them.
Horsedoodle. Until the Bushites took power and deregulated Wall Street speculators so they could essentially play casino games with poor people’s mortgages, the law worked beautifully! Loans were made, repaid, and bankers made profits. So don’t blame CRA. The damage came from money-grubbing interests having no relationship to that law. In fact, 75 percent of the high-risk home loans that were made under Bush’s anything-goes regime came from unregulated mortgage outfits, not from banks covered by CRA. They were working closely with such mortgage profiteers as Bear Stearns and Lehman Brothers, which also are not covered by CRA.
Experience shows that lending to poor people can be less risky than lending to the wealthy, including to Wall Street bankers. The idea that poor people caused Wall Street to crash is not an idea at all – it’s an ideological, knee-jerk smear.
“Poor Homeowners, Good Loans,” The New York Times, October 18, 2008.
“Subprime Suspects,” www.newsweek.com, October 7, 2008.