Minority Mortgage Meltdown (contd.) Pay No Attention To That Diversity Mandate Behind The Curtain


Was the
mortgage meltdown the fault of
Republicans or Democrats?
Was it caused by the ideology
of deregulation or of regulation?

Questions
like that are fun to debate because they follow the usual
fault lines that divide the country into fairly equal and
thus intensely rivalrous halves.

But let`s
think about the Housing Bubble from a more general
standpoint for a moment. Is it terribly likely that a
disaster that long gestated and then ran amok in plain sight
for over three years (from

2004
into early

2007
) would turn out to be overwhelmingly the fault of a
single party or ideology?

Why wouldn`t
the opposition have sounded the alarm? Don`t the Republicans
and Democrats, as well as the
free
marketers
and the

leftists
, all have well-oiled publicity machines for
pointing out the shortcomings of their enemies?

Isn`t it
more plausible that a vast, slow-motion catastrophe would be
the result of a noncontroversial

bipartisan
consensus?

In
particular, the more everyone agrees that

dissent on a particular topic is unspeakably evil
, if
not unthinkably unimaginable, the more likely the country is
to stumble over

exactly that blind spot
.

When
everybody tells you,
“Pay no
attention to that man behind the curtain”
, you
really, truly need to
start paying
attention
.

In recent
decades, “diversity”
has become one of America`s sacred mantras, propagandized
relentlessly in the

schools
and
the
press
. Expressing

skepticism
about the diverse within internal business
communications has become, in effect, a

civil offense
, punishable in

anti-discrimination lawsuits
.

Not
surprisingly, self-interested manipulators learned to play
the race card to justify their machinations.

Thus, the

universally-endorsed
societal necessity of
lending
more money to minority homebuyers
was used to justify
both regulation (such as the

Community Reinvestment Act
)
and deregulation
(such as the hands-off approach to subprime bucket shops).
Any practice positioned as helping minorities achieve their fair
share of the American Dream had the wind at its back.

Consider,
for example, three huge Southern California originators of
dubious debt—Ameriquest,

New Century
, and

Countrywide
—all of which collapsed in recent years when
Wall Street and the big banks finally wised up to the
mortgage-backed securities they peddled.

Yet, on the
retail side, these were not new-fangled scams. As

Elvis Costello
pointed out, there`s no such thing as an
original sin. They operated old-fashioned

boiler rooms
employing high-pressure salesmen to talk
people who had no business being homeowners into taking out
huge high-interest loans.

Laissez-faire lending is like a zero down payment mortgage:
there`s no margin for error. Fraud and even forgery always
loom as temptations. E. Scott Reckard and Mike Hudson
reported in 2005 for the
Los Angeles Times
on Ameriquest, then the biggest
subprime originator:

"Borrowers were told
what their income had to be to qualify, these
ex-workers said, and they were often coached to invent
fictitious side jobs, such as home-based computer
consulting, to hit the mark. Nearly one out of every six
Ameriquest mortgages sold to Wall Street investors in 2004
was a stated-income loan, according to a
Times analysis of
90,000 Ameriquest mortgages listed in filings with the
Securities and Exchange Commission."
[Workers
Say Lender Ran `Boiler Rooms`
, February 4, 2005]

We`ve been
down this path of fishy finance before. That`s why most
states have
usury
and

other laws on the books
to prevent lenders from
targeting marginal borrowers. Whether these laws are kept up
to date and whether they are enforced are different
questions, however.

It doesn`t
matter whether you call them anti-predatory lending laws or
pro-prudent lending laws. The point is that loans that are
unlikely to be paid off hurt everybody. Wise public policy
attempts to balance off

Type I errors
of excessive credulity versus Type II
errors of excessive skepticism.

So, surely,
the rise and fall of the

subprime peddlers
demonstrates the iniquity of the
rightwing ideology of deregulation? We needed more
regulation, not less!

Wrong!
Please notice that minority lending regulations primarily
pushed in what turned out to be the wrong direction: too
much gullibility. When it came to

mortgage lending to minorities
, as regulated by the
Community Reinvestment Act and

other anti-discrimination laws
, excessive skepticism

was made illegal
. Lenders and investors were only
allowed to err in one direction.

Not
surprisingly, excessive credulity came to dominate the
system.

By no means
were all the subprime peddlers sincere believers in the
dogmas of multiculturalism. Instead, they knew they could
wield political correctness like a club to scare off
regulators.

Thus, to
avoid inconvenient investigations, the owners of subprime
mortgage originators tended to present themselves to
politicians and the press as financial statesmen, moral
leaders in the war on bigotry against minority borrowers.

Sue
Kirchhoff reported in
USA Today
on April 17, 2007 in


Subprime lenders` big gifts helped lawmakers
:

“The nation`s top
subprime lenders, including New Century Financial

(NEWC)
, which has filed for Chapter 11, have lavished
generous donations on homeownership programs sponsored by
black or Hispanic members of Congress. The paid sponsorships
give lenders an entree to lawmakers and their constituents.
Along with New Century, backers include Countrywide
Financial

(CFC)
, which settled a New York fair-lending
investigation in 2006 by agreeing to compensate black and
Latino borrowers for improper loans and set up a $3 million
consumer-education program. Another is Ameriquest Mortgage,
which in 2006 agreed to a $295 million settlement with state
attorneys general who charged it with improper lending
practices.”

Similarly,
Susan Schmidt and Maurice Tamman of the
Wall Street Journal
reported on January 5, 2009 in


Housing Push for Hispanics Spawns Wave of Foreclosures
:

"The

Congressional Hispanic Caucus
created
Hogar in 2003 to work
with industry and community groups to increase mortgage
lending to Latinos. At that time, the national Latino
homeownership rate was 47%, compared with 68% for the
overall population. Hogar called the figure `alarming,` and
said a concerted effort was required to ensure that `by the
end of the decade Latinos will share equally in the American
Dream of homeownership.`

Hogar`s backers
included many companies that ran into trouble in mortgage
markets:

Fannie Mae and Freddie Mac
, both now under federal
control; Countrywide Financial Corp., sold last year to Bank
of America Corp.; Washington Mutual Inc., taken over by the
government and sold to J.P. Morgan Chase & Co.; and New
Century Financial Corp. and Ameriquest Mortgage Corp., both
now defunct.

Hogar`s ties to the
subprime industry were substantial."

Angelo
Mozilo of Countrywide, for instance, was a regular

keynote speaker
at minority

conferences
, where

Tan Man
regularly
“called for the elimination of the

down-payment requirements
for low-income and minority
borrowers.”
[Mortgage
Banking
,
January 2005]

Another
SoCal subprime legend was the late billionaire and
ambassador

Roland Arnall
, a leader of the Great and the Good as the

co-founder
of the Simon Wiesenthal Center and the

Museum of Tolerance
. He was also the owner of
Ameriquest, which went out of business in 2007 after
agreeing in 2006 to a

$325 million settlement
with 49 states over its abusive
practices.

Arnall was a
close personal friend of politicians of both parties. He
gave the

first $250,000
to Democrat Gray Davis`s successful 1998
California gubernatorial campaign. Gov. Davis reciprocated
by officiating at Arnall`s second wedding. Those investments
paid off in

2001
when Ameriquest`s friends in Sacramento failed to
put teeth in a predatory lending bill.

In 2003,
Arnall gave Gov. Davis $230,000, but donated to the man who
unseated him,

Arnold Schwarzenegger
, $1.4 million. Arnall became the
top donor nationally in the 2004 election cycle, leaning
heavily toward the GOP after decades of favoring Democrats.
Yet, according to his obituary in the

Los Angeles Times
, Arnall
“continued to donate
to certain Democrats, including many members of the
Latino
Caucus
in the state Legislature.”

Arnall put a
number of black civil rights leaders on the payroll, who
helped him get confirmed as the U.S. ambassador to the
Netherlands in 2006. ABC`s

Nightline
reported:

"I think no one has
said, for example, that Roland Arnall personally supervised
loans in a way that shows that he is not an individual of
good character," the Leadership Conference on Civil Rights`

Wade Hendersen
told "Nightline."

While Hendersen said
he is "profoundly disappointed that some of these practices
that have now come to light would be associated with
Ameriquest," he said that "at the end of the day, I`ll stand
by the fact that I think Roland Arnall is a man of
integrity."

The Leadership
Conference on Civil Rights has received hundreds of
thousands in donations from Ameriquest.

Similarly,

Deval Patrick
, now the Democratic governor of
Massachusetts, spoke up for Arnall`s nomination. Patrick
joined the Ameriquest holding company`s board of directors
in 2004 after suing them for discrimination in the 1990s. As
Matthew Richer

pointed out
in VDARE.com last year:

“Indeed, the curious
thing about Deval Patrick is his habit of suing an
organization for discrimination, then parlaying the
relationship into a coveted position with the same
organization later on …”

It`s common
for minority activists to start out by charging predatory
lending, only to eventually announce in triumph that the
lender has agreed to make even
more loans to
minorities.

If you stop
and think about it, it`s obvious that more lending to
minorities makes it mathematically inevitable that there
will be even more

imprudent loans to marginal borrowers
and more
foreclosures upon

minority homebuyers.

But nobody
stops and thinks because we`ve been told repeatedly that
minorities don`t get enough loans.

By the way,
who keeps telling us that? Well, it generally turns out to
be people like

Angelo Mozilo
and

Deval Patrick.

Funny how
that works…

Or, in the
case of the Minority Mortgage Meltdown, doesn`t work,
bringing down the entire world economy.

America
needs to get real about race–to acknowledge the man behind
the curtain—before something even worse happens.

[Steve Sailer (email
him) is


movie critic
for


The American Conservative
.

His website

www.iSteve.blogspot.com

features his daily blog. His new book,

AMERICA`S HALF-BLOOD PRINCE: BARACK OBAMA`S
"STORY OF RACE AND INHERITANCE", is
available


here
.]