Filed under: Economics, Poverty | Tags: Community Reinvestment Act, Jim DeMint, Mortgages, Steve King
crossposted at Political Correction
For much of the past two years, Congressional Republicans have wasted few opportunities to blame poor and working class Americans for the financial meltdown and the subsequent recession. They’ve argued that through well-intentioned government initiatives, including the Community Reinvestment Act, the government and those in traditionally underserved communities created much of the foreclosure crisis.
As Rep. Steve King (R-IA) often puts it, by promoting “bad loans in bad neighborhoods,” the government laid the groundwork for a catastrophic meltdown in the financial services sector. Sen. Jim DeMint (R-SC) has also blamed CRA for decreasing underwriting standards and increasing the number of loans to people who “could not afford to pay them back.” Often, the sentiment, such as King’s reference to so-called bad neighborhoods, comes tinged with a kind of subtle racism.
It’s all ridiculous. As Aaron Pressman pointed out back in 2008, “Just the idea that a lending crisis created from 2004 to 2007 was caused by a 1977 law is silly. But it’s even more ridiculous when you consider that most subprime loans were made by firms that aren’t subject to the CRA.” Additionally, as Paul Krugman notes, “Commercial real estate lending, which was mainly lending to rich white developers, not you-know-who, is in much worse shape than subprime home lending.”
Undeterred by such facts, conservatives — who have made their war on workers and the poor central to their platform — continue to blame rising delinquencies on the poor. In their efforts, they’ve even managed to drag immigrants in the conversation in an effort to tie the worst economic crisis since the Great Depression to their hateful nativist agenda.
But there is more to the story. The wealthy, the Republican Party’s core constituency, have played a much larger role in the foreclosure crisis then most had assumed. The New York Times reports today:
Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.
More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.
By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.