Wednesday, September 24, 2008

More On Where The Money Went

"The mortgage market was humming along just fine when, in the late 1980s, progressives decided that it needed to be "fixed." Their complaint: Some ethnic groups got approved for mortgages at lower rates than others.

In reality, mortgage lenders were simply being prudent - taking care to provide mortgages to those who could best afford to make the payments.

The shift began in 1989, when Congress amended the Home Mortgage Disclosure Act to force banks to collect racial data on mortgage applicants. By 1991, critics were using that data to paint lenders as racist by showing that minority applicants were approved at far lower rates. Banks were "Shamed By Publicity," as one 1993 New York Times headline put it.

In fact, they found a racial disparity only by ignoring relevant data on applicants' ability to make mortgage payments - such as their assets and credit history.

But the political pressure was intense - with few in politics or media eager to speak the truth. And then, in 1992, came a study from four researchers at the Boston Fed, which seemed to bear out the critics' contentions.

That study was, in fact, based on quite flawed data - but the authors' political, media and academic protectors stifled most serious criticism, smearing the reputation of one whistleblower and allowing the Boston authors to avoid answering serious academic challenges (mine included) to their work. Other studies with different conclusions were ignored.

The very next year, the Boston Fed announced new requirements for banks - rules that have now turned out to be monumentally catastrophic: Adopt "relaxed lending standards" or risk being labeled as racists, and face serious penalties under the federal Community Reinvestment Act."

Most of us have known for quite some time about these sort of handouts, the free monies given away by banks and lending institutions so as not to appear racist. When it came to private funding the only ones caring enough about where the cash went were those who were being swindled by the angry left and its legions of wealth redistribution socialists. But now its OUR tax dollars going towards bailout after bailout, and since we're supposed to be the ones in charge who is it that's standing up for us?

The media as a whole? Please now. Elected politicians? They can't make mention of the elephant in the room either. Were the NY Times to be anything CLOSE to the paper of record there'd be headline after headline blurting out the truth, the real truth, and nothing but the truth, and if John McCain were a Conservative Republican there'd still be a Republic to conserve.

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