Guess who’s buying into the revisionist idiocy that Dems and poor minorities created the financial crisis? George Will:
Put on asbestos mittens and pick up “Reckless Endangerment,” the scalding new book by Gretchen Morgenson, a New York Times columnist, and Joshua Rosner, a housing finance expert. They will introduce you to James A. Johnson, an emblem of the administrative state that liberals admire.
The book’s subtitle could be: “Cry ‘Compassion’ and Let Slip the Dogs of Cupidity.” Or: “How James Johnson and Others (Mostly Democrats) Made the Great Recession.” The book is another cautionary tale about government’s terrifying self-confidence. It is, the authors say, “a story of what happens when Washington decides, in its infinite wisdom, that every living, breathing citizen should own a home.”
The book centers on the Community Reinvestment Act and of course, the Big Dog.
The 1977 Community Reinvestment Act pressured banks to relax lending standards to dispense mortgages more broadly across communities. In 1992, the Federal Reserve Bank of Boston purported to identify racial discrimination in the application of traditional lending standards to those, Morgenson and Rosner write, “whose incomes, assets, or abilities to pay fell far below the traditional homeowner spectrum.”
In 1994, Bill Clinton proposed increasing homeownership through a “partnership” between government and the private sector, principally orchestrated by Fannie Mae, a “government-sponsored enterprise” (GSE). It became a perfect specimen of what such “partnerships” (e.g., General Motors) usually involve: Profits are private, losses are socialized.
Got it? The Carter-era CRA and the Clinton-era push for home ownership forced banks to give mortgage loans to “those people”, and because they couldn’t pay it destroyed America. Wall Street is 100% innocent, you see. It was all about the road to hell paved with Democrats and horrible government regulations and affirmative action and “those people” who destroyed the country.
Now I’ve talked about this book before when Walter Russell Mead demanded last month that the GOP make this racist lunacy the centerpiece of their 2012 anti-Obama campaign.
I’ve documented many, many times before that the whole “Community Reinvestment Act forced banks to give subprime loans to minorities who couldn’t pay” theory was total and complete baloney. Loans given under the CRA were to minorities that were in better average financial shape than the average subprime borrower. If anything, minorities who had better credit than the average subprime borrower were forced by greedy banks into subprime loans, even though they should have qualified for better mortgage rates. In fact, the vast majority of mortgage lenders that went under in the subprime housing disaster were not banks large enough to be covered by the CRA at all, so they made zero CRA loans and still collapsed. In fact, banks went out of their way to foreclose on minorities who had good credit and fell victim to bad loans pushed by the banks.
And the notion that the CRA and Fannie Mae and the Dems destroyed the economy and that Wall Street is the victim here is nothing new. It’s been proposed time and time again since President Obama was elected. The fact the George Will is only now getting around to this roundly debunked inanity just goes to show you how much of a complete toolbag he is. But as we get closer and closer to November 2012, you’re going to see Republicans move to this position. They’ll overtly pin it on “Democrat operatives” like James Johnson, but the dog whistle pipe organ will always be audible in the background.
“You see ‘those people’ destroyed the economy, not the really smart guys on Wall Street. Our corporate masters are beneficent and yes they made massive short-term gains and companies are sitting on record cash, but why would they ruin the economy they depend on in the long-run? That makes no sense! It was government regulation and affirmative action and trying to put all ‘them’ in homes in your neighborhood that wrecked everything!”
And as we’ve seen time and time again, the lunatic fringe of yesterday always becomes the mainstream GOP position of today. Whitewashing Wall Street’s culpability in the financial crisis is vitally important to the corporate interests that own the media and the GOP (and growing numbers of Democrats too.) George Will is more than happy to do his part by giving credibility to the big lie.[UPDATE] And if “those people bought houses they couldn’t afford and destroyed the economy” doesn’t get the right’s dog-whistle motor running, “those people raised the minimum wage and destroyed the economy” will.