How Affirmative Action Damaged Our Economy
"The mortgage bubble was essentially a bet on the purportedly increased creditworthiness of the bottom half of the American population. After three decades of the home ownership rate stalling at around 64 percent, a series of federal initiatives to increase minority and low-income ownership helped push the rate up to just below 70 percent.
The housing bubble ... never made much sense. The lower half of American society, where the new homeowners had to come from, isn’t getting better educated, is not settling down to more stable family structures, and is not developing a more rigorous code of honor about paying debts.
Nor was the government doing much of anything to help the bottom half earn more in order to afford home ownership. Indeed, by not enforcing the laws against illegal immigration, the Clinton and Bush Administrations were flooding the country with unskilled workers who competed down the wages of blue-collar Americans.
It turned out, not surprisingly, that contrary to the assurances of the Great and the Good of both parties, many of these marginal homebuyers should have continued to rent."
Read the rest. It's a long article, but well worth reading. As you will see, the Clinton and Bush administrations share much of the blame for this mess.
Labels: economy, general interest, politics
posted by scalpel at 2:34 AM
14 Comments:
I, for one, am tired of being told that I'm supposed to feel sorry who bought houses they couldn't afford, lied about their income to get or couldn't be bothered to try and understand the terms of the loans they were offered. Four years ago, when my husband and I were looking for our first house, we found out that the lenders were going to be more than willing to give us nearly three times what we thought we could afford to buy a house. We chose to not take what we were offered and buy a smaller house in what we thought was our price range. And even now, when I've been not working for three months (and he doesn't get paid in the summer) we have never even come close to missing a payment.
I agree that most of the culpability is on the borrowers who over-extended themselves. I do believe there was also a culture in the mortgage industry, especially at the sub prime lending level, that was all about 'sell, sell, sell' and no documentation loans to people earning 20-30k household annually with 590-650 credit scores were the hot new item. I mean after all in any given quarter a mortgage broker who peddles these loans only sees the upside in his bonus check -- it took several years of this lending for it to rot away the entire market. I also place blame on legislators who and government that allowed this to start in the first place and then didn't keep it in check after it got going.
Given the bailouts I think the FBI/DOJ should take all of these bad loans they've bought and individually investigate each one for fraud. If a particular broker or mortgage firm appears to have been conducting unethical lending then indict or if the fraud was clearly on the part of the individual borrower (falsifying income, etc) then indict. If the Feds don't have the jurisdiction pass it off to local law enforcement. Sentencing should be lenient but heft fines should be levied, wages garnished, etc. and a criminal record to follow you around should you decide you want to try to do it again. Give an amnesty period where people can come forward and admit their crime for a smaller fine and a lesser conviction.
If a giant mob of low-income, under qualified people walked into the Federal Reserve and stole $500 billion I have no doubt they would be prosecuted -- and that's essentially what they've done here.
Would that be affirmative action (which I thought was to improve jobs for minorities) or another program. Really, its is not so much helping minorities as trying to make as many loans as you possibly can.
I knew it was those damned minorities were responsible for this shit! And now one of them wants to be president! What is this country coming to?!
Wow girlvet.. bigot? Why not use your big girl words and back up that racist comment.
Rest assured there were plenty of toothless, white trash meth addicts financing their brand new double wides doing their part to sink this nation's economy, too.
In general it can be blamed on low-income, non credit-worthy people. I suspect it may be disproportionately minorities but I'm sure there were plenty of white people who've defaulted on their loans too. After all, those households below the poverty line in this country are disproportionately minority households. I wonder if there's a correlation?
If they had been honest the Brokers and realestate people,also the car dealers with all the legal and illegal poeple and our own that were frist time buyers this mess could have been avoided. But greed and who cares a sale is a sale so now the tax payers have to bail out the government and anyone else they think is in that pot with them.The whole lot should be sued by the tax payers that have to bail them out and the illegals all sent to their own countrys and give us tax payers a break.
God, anonymous, get a life, everyone who knows me in the blogger world and elsewhere knows that I was being SARCASTIC sweetheart...
Oops, sorry girlvet. silly me. I can tell by your reply to me that you are actually pretty upstanding.
Ahhh, I love sarcasm. Since tax-payer dollars once funded ebonics classes to public school students I think we should direct some of that money to teach our youth a much more useful and widely used language.
"Hello class, I'm Mr. Stevens and I'm just thrilled and exhilarated each day I get to come to school to be disrespected, ignored, underpaid, and threatened with violence in this broken, inner-city school sitting in my own sweat in our 104 degree classroom fighting off a hangover after drinking a fifth of scotch each night to dull the sense of worthlessness I feel as a public school teacher with coffee that tastes like burnt pencil shavings doing a job that would be better served by prison guards and isolation units which incidentally is exactly what many of you have to look forward after you dropout and this is Introduction to Sarcasm for first years."
Ahhh... Nothing like a good dose of Sarcasm to start the day, is there? :-)
Seriously, I for one am GLAD that the FBI/DOJ is getting involved in investigating this mess, late as it may be. My personal opinion is that there will be a lot of jail time to go around as those who made these bad loans (that we're all going to pay for over the next 100 years or so) weren't doing their job. Or worse, they purposely, as our esteemed coroner said, did everything possible to make as many loans as possible. Like cut corners. And overlook things that are important with respect to verifiable income and income level compared to the price of the house. And all of the other stuff that goes into determining whether or not someone can actually afford the house that they want to buy.
My $0.02 - won't buy a house, or anything else, for that matter.....
I was 22 when we bought our house and my husband was 26. We lived in an apartment for 2 years prior to that and owned hardly anything because we were SAVING for a house. We had 10,000 in the bank and no sofa the first year because we just didn't want to touch that money... and so saved for that too.
We ended up putting down 11,000 dollars on a 35,500 house. I know those amounts are laughable today and it is much more difficult to afford a house for young people starting out.
For 5 thousand more...we could've had a house and property twice the size but I knew we were having children and so we said no because I wanted to be a stay at home mom and not a slave to a mtg.
My heart was in the right place but my brain wasn't functioning because of course it wasn't long before houses ended up costing more and 5,000 dollars was a drop in the bucket by comparison.
But at the time...we didn't have it and it seemed like a lot of money.
We just didn't want to be over extended where today it seems like the norm.
Dr Schwab has a political blog up called "Cutting Through the Crap".
You can find the link over at Surgeonsblog.
We had affirmative action when I was in school. You had to shoo the dinosaurs away from the student dorm common areas back then. When I bought my first house we had affirmative action. When I got my first job we had affirmative action. The housing market had it's up and downs, but the wheels didn't come of except during Reagan's deregulation of S&Ls and, worse, Bush(II)'s extreme laissez-faire on the finance markets.
Try again, Scalpel.
grandoldpartyer.....damn you hit the nail right on the head!
mshkosh
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