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September 25, 2008
How Affirmative Action Caused the Financial Crisis
Posted by Dave Blount at September 25, 2008 6:58 AM
The mortgage mess became so huge as to threaten our entire financial system because Fannie Mae and Freddie Mac fat cats paid off liberal Senators, most prominently Chris Dodd, John Kerry, Barack Obama, and Hillary Clinton, to block reform attempts by responsible grownups like George Bush and John McCain. But how did these quasi-socialist mortgage giants get into trouble in the first place? As Ann Coulter observes, it was largely a matter of granting mortgages on the basis of Affirmative Action:
Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton's secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low- to moderate-income borrowers by the year 2001. […]
Threatening lawsuits, Clinton's Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn't a joke — it's a fact.
When Democrats controlled both the executive and legislative branches, political correctness was given a veto over sound business practices.
In 1999, liberals were bragging about extending affirmative action to the financial sector. Los Angeles Times reporter Ron Brownstein hailed the Clinton administration's affirmative action lending policies as one of the "hidden success stories" of the Clinton administration, saying that "black and Latino homeownership has surged to the highest level ever recorded."
Meanwhile, economists were screaming from the rooftops that the Democrats were forcing mortgage lenders to issue loans that would fail the moment the housing market slowed and deadbeat borrowers couldn't get out of their loans by selling their houses.
A decade later, the housing bubble burst and, as predicted, food-stamp-backed mortgages collapsed. Democrats set an affirmative action time-bomb and now it's gone off.
Imagine what would happen if we applied Affirmative Action principles to choosing the next president.
On a tip from Burning Hot.
