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Racism as Reflex - Blaming the Community Reinvestment Act

If hypocrisy were currency, conservatives would be able to single-handedly bail out the nation's free-falling financial system in less than a week, without the rest of us having to front so much as a penny.

We have Neil Cavuto of Fox News, followed by Rush Limbaugh a few days later, along with smaller-market talk radio hosts and commentators, insisting that the nation's current financial mess is not the fault of greedy investors, free-wheeling bankers, speculators and other assorted rich people taking advantage of a largely deregulated market for bogus investments. Rather, it is the fault of poor people and those who seek to serve their communities, and especially folks of color, and those who insist on such things as civil rights.

How so? Simple: according to these blowhards, laws like the 1977 Community Reinvestment Act, which seeks to steer investments to economically marginalized communities so as to stimulate economic development and reverse the longstanding process of racial and economic redlining, is the real culprit. If banks hadn't been forced to throw good money after bad, and make loans to "minorities and risky folks" as Cavuto said on September 18th, none of this would have happened.

...First, the Community Reinvestment Act only applies to banks and thrifts that are federally-insured. This means that the independent mortgage brokers, who are responsible for half of all the nation's sub-prime lending--and who have been writing such loans at more than twice the rate of banks and thrifts--aren't even covered by the law. And make no mistake, it was the hand of the mortgage broker, more than any other, that precipitated the housing bubble.

... CRA-related loans, for instance, the fact is, these represent nearly one-fourth of all loans written, but less than 10 percent of the high-cost, high-risk loans that precipitated the current crisis. These loans actually have lower default and foreclosure rates than non-CRA connected loans, and are twice as likely to be retained in the portfolios of the banks that originated them than other loans. In other words, it is not CRA loans being dumped into the hands of greedy speculators, and then falling flat, taking the economy with them....

.... So there you have it: white conservatives who simply cannot bring themselves to blame rich white people for anything, and who consistently fall back into old patterns, blaming the poor for poverty, black and brown folks for racism, anybody but themselves and those like them. That anyone takes them seriously anymore when they prattle on about "personal responsibility" is a stunning testament to how racism and classism continue to pay dividends in a nation whose soil has been fertilized with these twin poisons for generations. Unless the rest of us insist that the truth be told--and unless we tell it ourselves, by bombarding the folks who send us their hateful e-mails with our own correctives, thereby putting them on notice that we won't be silent (and that they cannot rely on our complicity any longer)--it is doubtful that much will change.

http://www.propeller.com/story/2008/09/29/racism-a...

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