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February 21, 2009

ACORN Brownshirts Seize Homes Across the Country

More on the militantly racist, communist thugs from ACORN, and their war on the concept of property:

The Porkulus package funnels $billions of our money to these goons, who will help ensure ACORN alumnus Obama's reelection with their nationwide voter fraud operations. These Bolsheviks are running the country now.

On a tip from Wiggins.

Posted by Van Helsing at February 21, 2009 9:40 AM

Comments

This actually gives me hope. The more I see of the growing socialist movement in the US the more I realize how easy victory is going to be once the Revolution starts.

Posted by: jcebern at February 21, 2009 10:03 AM

Give the mutts (Obama's word, not mine) what they want!!!!!

Where's my free house?????

Posted by: Shooter1001 at February 21, 2009 10:12 AM

These people are bolsheviks. A right to a house? They need to be steamrollered before this gets out of hand.

Posted by: Mike B. at February 21, 2009 10:20 AM

Fascists!! Just goes to show, evil is everywhere, even in kind looking old ladies!!

AC

Posted by: AC at February 21, 2009 10:43 AM

Maybe people need to collect acorns and dump trash bags full of them against the front door of ACORN offices as a protest against these commie fkrz? So if you have oak trees in your area---- Im just sayin'. You could pay the neighborhood kids by the pound (it will give them something to do and keep them out of trouble).

Posted by: Anonymous at February 21, 2009 10:46 AM

ACORN rakes in millions from shaking down banks and government. Why can't they help out people by subsidizing their mortgages with their own ACORN money?

Because they're greedy, that's why. They don't want to help people, they want to take money away from people who earned it rightfully.

Posted by: V the K at February 21, 2009 10:49 AM

When homeowners don't pay back borrowed money, what happens to the lenders?

Think about it in these terms: You loan money to me so that I can buy a TV, and I don't pay back the money. What choice do I have for recovery except to take the TV and resell it?

Posted by: Always On Watch at February 21, 2009 11:35 AM

Implicit in Bertha's viewpoint is that she and her fellow travelers will be doing the seizing. How would she like if it some other group came up with some bogus argument for why they should seize her property?

Suppose American Indians said that her house was on their traditional tribal land, and then ACORNed her claiming that they had some "right" to it? (And that would be a better argument than Bertha's, btw.) She'd be howling with rage at having her property seized.

Posted by: Jay Guevara at February 21, 2009 11:42 AM

They are drunk with power...for now. And just like a little kid who does not know how to be moderate when eating candy, or a teenager who doesn't know when to stop drinking alcohol, these mini-despots are WAY underestimating how easily America will roll over and play dead.

They are pissing off at LEAST 150 million people. They will find out the hard way just how fast their "Hope and Change" will come to a screeching halt.

Posted by: Montag (matt) at February 21, 2009 11:55 AM

Montag,

I agree, I think they are setting themselves up for a huge smack down. It's not too early to start the popcorn maker. I think this will happen sooner rather than later.

Posted by: Mike B. at February 21, 2009 12:26 PM

I dunno. People are getting pissed now, but in general, they are pretty dumb and easily led. That is why 0bama was elected in the first place. He'll send everyone a couple hundred bucks in stimulus checks in October 2012 and likely win again. The dumb are just too many.

Posted by: Smoke TNT at February 21, 2009 12:40 PM

I can't wait for one of these Acorn dillweeds to try to take over a house that was bought by someone else in a state with a castle law. Here in Ohio it is legal to plink anybody who breaks into your place of residence.

Posted by: Stephana at February 21, 2009 1:40 PM

God, what a fascist idiot. She honestly thinks she can win an argument by dragging him around in circles.

Posted by: Archduke of Phunk at February 21, 2009 2:23 PM

That ridiculous hag has a transparent racist-fascist agenda she's trying to peddle as "fairness".
No single point of reason with this “Executive Director” would in any way result in a logical conclusion; like arguing with concrete (something that I personally try not to do).
Interesting however, that the moderator took off challenging her so vigorously inasmuch as she represents such a combination of sacred elements of our society (black, old, female, activist for the poor, thick as a brick).

I wouldn’t be surprised if a lot of his co-workers were recoiling from him like he just sat down in the hot tub with a bad case of leprosy.

Posted by: Fiberal at February 21, 2009 2:31 PM

I'm thinking that these actions are something akin to dress rehearsals, in preparation to attempt similar assaults on homes which are occupied by people whom ACORN deems "unworthy" to have them...for some reason, I suspect that middle-class Whites would fit that particular bill.

Posted by: Toa at February 21, 2009 2:33 PM

"jcebern at February 21, 2009 10:03 AM"

I agree. Now that they have come out in the open, we have TARGETS. It's hard to fight propiganda, but attacks can be met with bullets.

On some sites, Liberals will demand what we "gun nuts" will do when confronted with tanks. The proper answer should be "I know where the local National Guard armory is and there are plenty of LAWS and AT4 rockets there". After all, when Bonnie and Clyde were killed, they had THREE machineguns from the Texas National Guard in their car. Also in the sixties, the local armory was looted and the criminals even stole two duce-and-a-half trucks to carry off the weapons that included 90mm recoiless rifles!

Posted by: KHarn at February 21, 2009 2:48 PM

Toa,

I agree, this is just one in a series of trial balloons that have been floated - you can bet your ass they didn't try to pull this without checking with the White House first. This is what Obama wants. They are waiting to gauge the reaction to see if they can get away with this type of action on a much larger scale. The argument will be something like "Well, it doesn't make sense for these homes to sit vacant. These homes are a resource that we can't have sit idle in this time of crisis." Once the banks are nationalized, lookout.

Posted by: Mike B. at February 21, 2009 3:06 PM

Her defense is falling back on belligerence "I'm right, you're wrong". She can grin and repeat it into exhaustion. There is no reason or argument. The low road is never too low.

Posted by: Rudy at February 21, 2009 3:21 PM

Throw the fuckers out in the fucking street!
Where are the cops?
I have as much right to occupy the McMansion a few blocks away than these mutts have to occupy somebody else's property!!!
I paid for my damn house! Its mine. I worked for it. If those people can't pay for those houses then they should get the fuck out!

This is just a trial balloon for really violent action across the nation.

Ayers and Obama have their fingers in this. Nip it now or else we'll have riots like the 60's and 70's. Then we'll just have to pay for these people's free houses.

Posted by: Shooter1001 at February 21, 2009 3:25 PM

Just shoot me in the head already!! I can't take these dimwits any longer. UNBELIEVABLE!!!!!

I just smoke two blunts, but I'm not high

I just drank 20 beers but I'm not drunk

I haven't paid my mortgage in 3 months but I'm not behind on my payments, therefore you can't kick me out of my home because it's my right.

These people should be shipped out onto an island far far away, better yet rocketed out of the earth's atmosphere to a far far away galaxy.

Posted by: Mary at February 21, 2009 3:41 PM

ACORN one very bad and rotten nut putrid to its core

Posted by: SPURWING PLOVER at February 21, 2009 3:50 PM

Spurwing, you said it in a nut shell.

Posted by: draen at February 21, 2009 4:22 PM

Where has this been reported besides Fox?

Silly question?

Posted by: Shooter1001 at February 21, 2009 5:02 PM

Posted by: Rob Banks at February 21, 2009 5:56 PM

What an asshole. How the hell do you get that guy's job? To let a lobotomized ACORN stooge sustain a ridiculous lie for as long as she did is journalistic malpractice. Why did the dumbass not demand she define the terms she was using? Delinquent yet paying their bills? What the effing fuck?

Posted by: ccoffer at February 21, 2009 8:10 PM

Posted by: V the K at February 21, 2009 8:25 PM

Someone reach out and touch this ignorant bitch and her minions with a 3,200 fps finger. This ignorance has gone viral, and the only way to end it is from the top down.

Posted by: ghillie at February 21, 2009 8:55 PM

So if I pay my taxes and work hard and don't pay my mortgage I should get it because I have the right to the pursuit of happiness?? And the pursuit of happiness = a home.

Well what if my pursuit of happiness is a tractor trailer full of cigarettes? Or my own nuclear bomb or an Abram's fighting vehicle for the morning commute. Can I just skip down to the old army base and take one.

What if my pursuit of hapiness is a 20 carat diamond from Tiffany's? I pay my taxes...

is there such a thing as circular illogic??

Posted by: girlgoyle at February 21, 2009 9:34 PM

"The most American thing you can do"... is what? Scream "racism", squat in houses that aren't yours, defending robbing Peter to pay Paul who can't pay his 1000 a month mortgage on a burger flipper's salary?

I am taken aback by the stupidity of these people.

They had a post over at Sweetness and Light telling how this one lady was foreclosed on after not paying her mortgage for some time, due to the fact that her payments went up "300 dollars a month". Apparently some of these SHOULD BE RENTERS got themselves into an adjustable rate mortgage and were too stupid to realize it. Pathetic.

Posted by: Atomic Lib Smasher at February 21, 2009 11:04 PM

And thanks again, VH for putting the blog up in the blogroll. I appreciate it, brother.

Posted by: Atomic Lib Smasher at February 21, 2009 11:05 PM

Girlgoyle: your post reminds me of the Simpsons episode where Bart is working for the mafia-
Fat Tony: 'Bart, is it wrong for a man to steal a loaf of bread to feed his family? What if he has a large family and, instead of bread, they like cigarettes?' Fat Tony would turn up his nose in disgust if Acorn offered him an executive director position.

Posted by: Mandible Claw at February 21, 2009 11:54 PM

Metaphor the lady should have used:

Foreclosure is like share-cropping; it is just discrimination under another name.

The idea: "We'll give you a loan; then, we'll jack up the rate of the loan to squeeze you for every last cent. And if you can't pay, we get to keep a year's worth of mortgage and the property as well."

The miscalculation of the banks was that they thought that the foreclosure rate would only be a relatively small amount more then that of standard mortgages, instead of many times more.

To counter the most obvious objection; banks were arm-twisted into granted only a small amount of these loans. ACORN did slide in the thin edge of the wedge by making the government back these /kinds/ of loans. However, banks granted the majority of loans when they got blinded by dollar signs and started printing applications as fast as they could.

Posted by: Anonymous at February 22, 2009 12:19 AM

They are drunk with power...for now. And just like a little kid who does not know how to be moderate when eating candy, or a teenager who doesn't know when to stop drinking alcohol, these mini-despots are WAY underestimating how easily America will roll over and play dead.

They are pissing off at LEAST 150 million people. They will find out the hard way just how fast their "Hope and Change" will come to a screeching halt.

Posted by: Montag (matt) at February 21, 2009 11:55 AM

---------

You are forgetting that 62+ million assholes actually voted for this groups esteemed leader Obama.

Posted by: Moonbat skullcracker at February 22, 2009 12:26 AM

She's clearly deluded enough that she believes her own propaganda. I don't want her to use my money for ANYTHING.

Posted by: pseudotsuga at February 22, 2009 1:42 AM

Banks were/are forced to give loans to minority members despite any individual's ability to make the payments. Once the word was out, 'free McMansions' and the lenders could/had to lend money to those who had no possibility of ever making the payments, the house rush was on.
The banks didn't care, they simply sold the notes, which were implicitly backed by the dumbass government, greedy rating agencies gave them an 'AAA' rating and everybody bought them all up.
Now, these mutts can't/won't pay, not that they ever could or would. But these folks are different, they are 'entitled', the rules are different for them because they're 'poor' and 'disenfranchised' and deserve a McMansion that all those rich bastards should pay for because they deserve it. They now have their man as POTUS handing them money for 'community organizers', soon to be the semi-military ghetto enforcement militia.
The pieces are coming together! Wait until we hear his immigration policy. Does the word amnesty ring a bell?

Posted by: Shooter1001 at February 22, 2009 5:27 AM

I hate to point this out... but this sound EXACTLY like what happens in Mexico. For years they've had some kind of law that if you "occupy" a "vacant" property for X number of years - it becomes "yours".

I suspect that in part that is why so many of the illegals coming over the border here have the attitude that they can just take over our country.

~Ex-Bat

Posted by: Ex-Moonbat at February 22, 2009 5:37 AM

To counter the most obvious objection; banks were arm-twisted into granted only a small amount of these loans. ACORN did slide in the thin edge of the wedge by making the government back these /kinds/ of loans. However, banks granted the majority of loans when they got blinded by dollar signs and started printing applications as fast as they could.

Posted by: Anonymous at February 22, 2009 12:19 AM

Er........... Yeah, but you're missing a fairly significant part of the story, ie., that the banks were prepared to make money by taking on such loans because they could sell them to Freddie Mac and Fannie Mae.

So yeah, banks that were on one side being pushed into race-based subprime lending on the ostensibly noble basis of "anti-redlining," were on the other hand reassured by the fact that they could parcel up delinquent mortgages and sell them to the gubmint via Freddie Mac and Fannie Mae -- which bank wouldn't take that deal?

The whole thing, in practical terms, comes down to race-hustling to reverse banks' practices of "redlining" ghetto areas -- in other words classifying bank's risk analyses as an issue of race.

I'm going to be brutally honest here, but please tell me whether it is the banks' fault that the culture of African-Americans means black neighbourhoods tend to have higher-risk lending profiles -- after all, a bank operates purely on the basis of profits vs. risk, and there could hardly be a less race-related means of adjudging African-Americans than by their proportion of mortgage defaults, whether or not one subscribes to the belief that African-Americans' cultural weaknesses and problems are caused by earlier mistreatment of their community as a whole.

Is it racist to note that black communities tend to have a higher risk profile?

Perhaps; it very well could be -- but if racism can be adjudged based on simple economic reality, then perhaps the concept of what racism actually is needs re-defining.

Regardless, the fact is that the CRA, the activities of Acorn, and the ascendancy of race-hustling ala Jackson/Sharpton, meant there was plenty of stick to urge banks into lending to residents of certain communities on the basis of the colour of their skin -- surely a more overtly racist act (according to the original definition of racism) than redlining a community based on the usual risk profile of borrowers of matching skin colour -- while at the opposite end was the incredibly huge carrot of implied government backing via the quasi-federals, FRC and FME..

The point of this whole post being that government interference in a free market is the destruction of that free market, by definition, and that whatever banks' faults and mis-steps, it's unfair to blame them without casting on the federal government and race activists a proportional amount of blame -- ie. one that is far, far larger.

Posted by: Mandible Claw at February 22, 2009 6:44 AM

In the above post, of course, I neglected to mention that Acorn are now playing their final part after the whole drama has come full circle -- seizing private property on behalf of "the poor" -- clarifying quite precisely their original intentions in the whole issue, ie. to obtain property, due legal process be damned, the role of banks be damned as well. The proof is, of course, always in the pudding.

Posted by: Mandible Claw at February 22, 2009 6:49 AM

I love it when these people are asked a straightforward question, or a simple yes or no question, and then they just go completely off the grid with their answer.

He asked you if you had a right to stay in a house you can't afford, and she answers something about the banks being at fault.

JUST ANSWER THE DANG QUESTION!!! If a truthful answer is going to hurt you or or organization, maybe you ought to rethink your participation in said org.

Posted by: nitrain at February 22, 2009 8:44 AM

Mandible, your enumeration of certain problems in the Black American culture has nothing at all to do with racism; it is just a plain statement of facts, which White "Progressives" are petrified of addressing, and which Black race-hucksters refuse to aknowledge.. Any Black Conservative will agree with your thesis wholeheartedly.

Posted by: Toa at February 22, 2009 8:50 AM

Here's a Little fact that the Hosebags in Washington or Accorn aren't telling you. Whose money is Accorn tell these losers not to pay back? A mortgage company or Bank. Whose money is invested in a Mortgage Company or Bank? YOURS, yes depositors or Investors put up the cash, via deposits in a bank, or stocks that people many not even realize their money is invested in.

So who is the Piece of Sh*# ripping off You!!!

Posted by: Unicorn fart at February 22, 2009 9:04 AM

Ok, maybe I'm not understanding capitalism...

I have a problem with the current "all or nothing" system of equity. I have no problems with foreclosure as such, things happen to people and the banks do have the right to cover losses. However, I do have an issue with one party getting excessive benefit by keeping both the property and the money paid.

This system can be abused both ways. Taking a loan that a person can afford, turning it into one they cannot, and seizing the property is one example. On the other side, people in rapidly falling markets sometimes secured another mortgage for a cheaper property and forfeited the first house, handing the bank the bag both for the debt and the now worthless property.

I realize the bank incurs cost as the result of lending and thus has the right to recover that, however, I doubt that is equal to a full year of mortgage payments. Could there be reform so that when an equity contract is resolved short of completion both parties are made equal as to the money paid and the actual value of the property? This could protect both sides and prevent such abuse.

As for racism in banking; it is a little more subtle then that. I have no problem with banks using financial data to issue mortgages. However, they were also using factors that had nothing to do with ability to pay, such as a person's current address and last name. Reform was possible. Of course, these idiots took legitimate complaints and took them way too far, but you guys do that all the time as well.

Posted by: Anonymous at February 22, 2009 9:50 AM

Where is James Earl Ray when you need him...

Posted by: Boonie at February 22, 2009 10:39 AM

However, they were also using factors that had nothing to do with ability to pay, such as a person's current address and last name.

Last name? Are you kidding? How could one possibly implement discrimination on that basis? Most blacks have surnames indistinguishable from the rest of the population.

Bottom line: banks don't loan money on how much they like someone, or how much they'd like person to marry into their family, but rather on how likely they think they are to make money from the loan. Period. They didn't loan to inner city blacks because they didn't think they'd be repaid.

And they were right.

Posted by: Jay Guevara at February 22, 2009 10:44 AM

Let's see if I can put my head into the mind of a leftist idiot for a second.

A deadbeat takes out a mortgage loan from a bank with no reasonable prospect of paying it back (possible due to shakedowns by ACORN and the threat of lawsuits from the Federal government against banks that don't make enough bad loans to minorities). Deadbeat doesn't pay loan. Deadbeat is entitled to keep house.

The only way one could buy into that is if one believes one is entitled to take someone else's property for nothing. But surely that cannot be the basis of leftist economic theory.

Can it?

Posted by: V the K at February 22, 2009 11:17 AM

These idiots actually think Obama is going to GIVE them anything they want. THAT is how he got elected and now they want their pay-back. Entitlement thievery is all this is! These THUGS need to be stopped NOW!

Posted by: TED at February 22, 2009 11:36 AM

"I'm right, you're wrong" Welcome to the Black argument. Any objection to that argument is racism, they have been taught this for decades by their race warlords. They are ENTITLED to be right.

Posted by: TED at February 22, 2009 11:50 AM

This woman is a perfect example of the Blacks hailing from the underclass Left Wing who call in and try to argue with Conservative talk show hosts: simple, logical points fly right over their heads while they just keep repeating the same tiresome "shakedown" cliches.

I'd sure like to see this gal go up against Tom Sowell or Walter Williams...she'd resort to the ol' ad hominem name-calling REAL QUICK! :D

Posted by: Toa at February 22, 2009 2:53 PM

You know what's funny about this? I guarantee you that its not just people on the right that are pissed about this. All of the 'feel good' lefties will be unnerved if this continues as I believe it will. I've said it before, but in six months, its going to be difficult to find anyone who admits to having voted for Obeyme.

Posted by: Mike B. at February 22, 2009 5:40 PM

"Last name? Are you kidding? How could one possibly implement discrimination on that basis?"

Are you kidding? There are both distinctively Black names, and oh yes, other ethnicitys with easily separable last names.

Posted by: Anonymous at February 22, 2009 7:19 PM

There are both distinctively Black names, and oh yes, other ethnicitys [sic] with easily separable last names.

Really? Such as? Most black American surnames are indistinguishable from those of whites. (Let's exclude "Shabazz," and even "Washington.")

Consider names in the news. C. Rice, C. Powell, E. Holder, C. Thomas, M. Steele, T. Sowell, B. Bonds, T. Hunter, L. Tomlinson, J. Jackson, A. Sharpton, D. Paterson, and let's not forget B. Lewis.

You tell me anyone would know those people are black and I'll post the addresses of a thousand people with the same name, and you can tell which are black. Case in point: there are 114 "C. Rice's" in New York City alone. Which are black?

Posted by: Jay Guevara at February 22, 2009 8:04 PM

"Posted by: Jay Guevara at February 22, 2009 8:04 PM"

Again, discrimination happens to groups other then blacks. You're the one with the limited perception here.

Can we at least agree that ability to pay should be (at least nearly) the exclusive criteria?

In those cases where a person who is able to pay is turned down, what is an appropriate redress for them?

Posted by: Anonymous at February 22, 2009 10:31 PM

In those cases where a person who is able to pay is turned down, what is an appropriate redress for them?

They go to a different lender.

It's how capitalism works.

Unless you believe the banks just hate making money from viable loan applicants, or that racism trumps the profit motive.

Then again, you probably do believe that, since you seem to smell racism in every breeze of the wind.

Posted by: V the K at February 23, 2009 6:03 AM

Anonymous @ Feb 22, 9:20 -- Supposing you're completely correct, and banks used 'black' street addresses and last names to specifically deny black people credit -- on what basis do you suppose it was that the banks did this? Are you suggesting that, despite black communities as a whole having a culture that avoided behaviors associated with a higher lending risk, such as single parenthood, that banks just decided for completely arbitrary reasons,to avoid certain potential markets?

Posted by: Mandible Claw at February 23, 2009 9:02 AM

Anonymous @ Feb 21, 10:30 - '..where a person who is able to pay is turned down, what is an appropriate redress for them?'
 Er.. Giving their business to another bank - one smart enough to weigh their proof of ability to pay above their skin pigmentation..? You forget you're dealing with capitalists here-actual numbers mean more to us than melanine content. If a bank turned down a loan application on the basis of skin colour alone,that bank deserves to lose the customer to a better bank.

Posted by: Mandible Claw at February 23, 2009 9:40 AM

Posted by: Anonymous at February 22, 2009 10:31 PM

Again, discrimination happens to groups other then [sic] blacks. You're the one with the limited perception here.

Rubbish. What is the evidence for that? And what other groups? Lenders lend to make money, not to help they like. I know it’s a matter of liberal theology, but lenders aren’t going to turn away profitable business because they don’t like the borrower. They turn away business that they think is not going to make them money, or worse, is going to actually cost them money.

Here’s a bonus question: loan sharks operate in black areas, don’t they? Is that because loan sharks like blacks, or because they figure they can make money there?

Can we at least agree that ability to pay should be (at least nearly) the exclusive criteria [sic]?

Of course. For the reasons outlined above, I think that’s exactly what used to happen before Democrats decided to muck around with lending, and what I hope is happening again now. You’re the one who is applying race-based criteria to lending. Anyone with a scintilla of business ability just looks at the expected return on the loan.

Can we further agree that if ability to pay is the exclusive criterion (along with a track record of paying off debts – ability to pay alone is not enough, willingness to pay has to be included), and based on that criterion blacks are underrepresented in the borrower pool, then that’s just too bad, and you’ll join me in opposing any effort by pressure groups or the government to change the racial balance?

Posted by: Jay Guevara at February 23, 2009 10:23 AM

Yeah, sorry about my spelling.

"Unless you believe the banks just hate making money from viable loan applicants, or that racism trumps the profit motive. "

How quickly you forget segregation, where businesses turned away thousands of potential customers and fought hard to be able to do so. Yes, sometimes racism trumps profit. It is stupid, but it happens.

I can easily imagine you guys sitting around on a porch in a southern summer in the sixties clucking about how uppity everyone was getting.

"loan sharks operate in black areas, don’t they? Is that because loan sharks like blacks, or because they figure they can make money there?"

They do because banks won't. Those loan sharks aren't going out of business, are they? There is money to be made.

"you’ll join me in opposing any effort by pressure groups or the government to change the racial balance?"

Artificially? Yes. I'd happily allow anyone who could prove they should have gotten a loan based on their standing to sue for discrimination, but I in no way favor any kind of quota.

I'll join with you guys in saying that people who went far and obviously beyond their means made their own problems. However, I think there was a lot of avoidable abuse.

Posted by: Anonymous at February 23, 2009 10:56 AM

How quickly you forget segregation, where businesses turned away thousands of potential customers and fought hard to be able to do so. Yes, sometimes racism trumps profit. It is stupid, but it happens.

Yes, we finally managed to break the Democrats’ penchant for segregation, but a) we did that a long time ago, and b) banks can be nation-wide now (which they weren’t allowed to be until the 70s, IIRC). Your position requries that no bank, anywhere in the country, would loan to a minority; none of them would break ranks to pick up business and make a profit. Sorry – no sale.

They do because banks won't. Those loan sharks aren't going out of business, are they? There is money to be made.

Your position is logically inconsistent. Surely you can see that. Loan sharks – not well known as advocates of civil rights and equal opportunity - operate in black areas because there’s money to be made, but banks do not want to make money doing the same thing because they don’t like blacks? Doesn’t make much sense, does it? How do banks manage to employ only galloping racists? Do they recruit at Klan meetings, or something?

Here’s a more sensible explanation: banks don’t loan in the inner city because they cannot legally charge high enough interest rates to offset the historical default rate. They would lose money (as they have done on the subprime mortgage fiasco), and thus don’t do it. Loan sharks are already outside the law, so legal restrictions on interest rates are irrelevant to them. And defaulting to a loan shark is, well, a bit more problematic than doing so to a bank. Furthermore, you can bet your ass loan sharks charge enough interest to offset any defaulters that they can’t find and strong-arm. If banks could charge whatever interest they wanted, they’d be loaning money even in the worst areas in America.

Look at this way. Venture capitalists typically expect a 40% annual return on their investment in a startup, and won’t invest if they don’t think that’s likely. Forty percent! Why? Because most startups either fail, or become illiquid zombies that represent dead money. The startup in ten that succeeds has to cover the losses generated by the other nine that either failed outright or end up treading water. Want to stop VC investment? Cap their returns at a lower figure. Then VCs would be just like banks in the inner city – snapping their checkbooks shut.

Simple business, really.

Posted by: Jay Guevara at February 23, 2009 2:15 PM