The New York Times reports that Thomas Perez, the new head of the Civil Rights Division plans to go after banks for "reverse redlining." Redlining is the practice of banks singling out neighborhoods based on race in order to deny them loans (banks would literally draw red lines around black neighborhoods to illustrate where lending was verboten). Reverse redlining is when residents in these same neighborhoods are given access to loans but hit with all sorts of predatory lending practices.
When the market finally crashed in the fall of 2008, conservatives stopped denying that there was a housing bubble to begin with and instead settled on the fiction that the 1977 Community Reinvestment Act, which outlawed racial discrimination in lending, caused the crisis. In fact, the crisis was caused by banks leveraging risky loans to infinity and beyond, and most banks regulated by the CRA didn't provide sub-prime loans. Conservatives enjoy using race as a proxy for "risky borrower," but studies have shown that black and Latino borrowers were far more likely than whites to get subprime loans regardless of credit history or income level. Conservatives looking to attack the Civil Rights Division for doing its job are likely to reprise the "black people caused the economic crisis" theory in order to argue that the Department of Justice is "politicized."
Going after discrimination in lending practices is a move that's well overdue. The Justice Department is actually following on the heels of Civil Rights organizations like the NAACP, which filed a lawsuit against Wells Fargo for targeting blacks for subprime loans last year. Former Wells Fargo employees stated in affidavits that loan officers at the bank referred to their minority customers as “mud people,” and subprime loan as “ghetto loans.”
Before the Obama administration, we had a Justice Department run by people ideologically opposed to the traditional mission of the Civil Rights Division -- even those career lawyers who might have been interested in going after banks for discriminatory practices would have been overruled from doing so. Now we have an administration that is committed to enforcing civil rights laws and fighting racial discrimination.
It makes a big difference.
-- A. Serwer
