Republicans on the Financial Crisis Inquiry Commission have released their final report. The culprit for 2008's global financial meltdown? Minorities!:
“While the housing bubble, the financial crisis, and the recession are surely interrelated events, we do not believe that the housing bubble was a sufficient condition for the financial crisis,” the document states. “The unprecedented number of subprime and other weak mortgages in this bubble set it and its effect apart from others in the past.” [...]
Citing several government agencies, the document argues that “the government subsidized and, in some cases, mandated the extension of credit to high-risk borrowers, propagating risks for financial firms, the mortgage market, taxpayers, and ultimately the financial system.”
Granted, "high-risk borrowers" could mean a large variety of people. But given past Republican rhetoric, it's safe to assume they are referring to minorities and pinning the blame on Fannie Mae, Freddie Mac, the Community Reinvestment Act, and federal efforts to encourage minority homeownership. Of course, this flies in the face of established facts. As Paul Krugman notes, "The Community Reinvestment Act of 1977 was irrelevant to the subprime boom, which was overwhelmingly driven by loan originators not subject to the act." What's more, mortgage securitization by Fannie and Freddie dropped as the housing bubble reached its point of maximum inflation, while "securitization by private players surged." And finally, when the bubble burst, high-income earners were much more likely to default on their loans. According to David Streitfeld of The New York Times:
The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent.
But hey, poor minorities -- they're so irresponsible!
-- Jamelle Bouie
