Where our misery began

Arkansas Democrat-Gazette ^ | September 23, 2008 | Mike Masterson

[navysealdad]

I believe a former investigative reporter for Atlanta’s daily newspaper likely pitched the snowball that grew into the avalanche and buried our leading mortgage institutions. Bill Dedman in 1989 produced a series called “The Color of Money” that exposed the practice of redlining by banks that routinely declined risky home loans in low-income neighborhoods. Dedman wound up with a Pulitzer Prize and supporters for his cause within the federal bureaucracy. Sadly, most who initially benefited from his story have wound up with foreclosure notices. To understand what transpired following Dedman’s series, everyone should read two important commentaries. One was published on Feb. 5 in the New York Post and the other on Sept. 15 in Investor’s Business Daily. They reached similar conclusions: We are paying today for policies and practices born and pushed early in the Bill Clinton administration that forced lending institutions to make housing loans to otherwise unqualified buyers.

[SumProVita]

“We are paying today for policies and practices born and pushed early in the Bill Clinton administration that forced lending institutions to make housing loans to otherwise unqualified buyers.”

Exactly! And now, Obama wants to take $$$ from those who have worked and saved and GIVE it to those who are unqualified.

[Mad Dawg]

Sowell the Wise once pointed out that if there were discrimination in lending to, ahem, minorities, then the minorities should have a better rate of payment and a lower rate of default than the general population. They don't.

The whole CRA(p) thing required financial institutions to behave without regard fro the bottom line, which means without regard for financial security, which means sooner or later they're gonna hit the wall. If, God forbid, the gummint wants to make housing grants, let them make housing grants. What we had here was an inadequately funded mandate for financial institutions to go crazy and behave imprudently.

Thus we see that liberals war against virtue to achieve a ideal result only practicable in cloud-cuckoo land.

[1rudeboy]

There was also that "study" done by the Philadelphia Inquirer(?) that claimed to statistically prove that banks are "racist" in in their lending practices. In the whole, it was probably more damaging than that Bellesiles gun-ownership nonsense, but the way the results were repeated ad nauseum by the MSM, politicians, and others was exactly the same.

By the time it was disproved, it was too late.

[IamConservative]

I believe the issues began in the 90’s, but Bush and the Pubs (2000 - 2004) certainly didn’t do anything to slow them down. If anything, the availability of credit for unqualified borrowers increased.

To this day, my 20 year old daughter who is in college and doesn’t even have a job gets offers for credit cards with $25K limits. When I was in college, I had a job and couldn’t even get a Shell card.

This insanity continues.

[combat_boots]

ACORN and the Woods Foundation to the rescue.

Obama has a lot of experience with working for housing reform. Just ask the people who benefitted, who have new or refurbished houses, apartments and condos in Chicago as a result of ‘his’ programs. Many people, including developers and financiers, were ‘helped’ by participating in such programs.

Right?

[1rudeboy]

My line-of-reference is the gun control debate. Take a bunch of gun-grabbers, rent them an office, give them a name such as the Violence Policy Center, and let them loose.

It doesn't matter that the underlying study is disproven, they'll still use it.

[gussiefinknottle]

as soon as clinton got in office, alice rivlin began beating the lending/
racism drum,

[hoosierham]

The banks were punished for prudent business practices,that is, lending money only to those likely to repay.And all those who do pay their bills now get to pay the fatcats,crooked pols,and the bad loans.

[VanShuyten]

Redlining, per se, is wrong. There were working people who lived in those areas that were denied housing loans solely because of where they lived. The solution would have been to apply the same lending guidelines to those people as to others. Instead, the banks didn't do anything until the Clintons started strongarming the banks to loan to anyone in the redlined areas, and then compounded that by guaranteeing those subprime loans through Fred&Fanny.

[Bill Dedman]

In his opinion article accusing me of starting the mortgage credit crisis, Mike Masterson makes a fundamental misunderstanding.

My 1988 series of articles in the Atlanta Journal-Constitution dealt with the failure of banks and savings and loans to make mortgage loans in middle-income black neighborhoods.

Middle-income black neighborhoods.

But all Mr. Masterson remembered from these articles was “black,” so he made an assumption. He writes, “Bill Dedman in 1989 produced a series called ‘The Color of Money’ that exposed the practice of redlining by banks that routinely declined risky home loans in low-income neighborhoods.”

See what he did? Hearing “black,” Mr. Masterson decided that meant “low-income.” He thought “black” meant “risky.”

Mr. Masterson’s assumption is precisely the same one that many bankers in Atlanta and elsewhere applied at that time. For years they had made loans in even the poorest white neighborhoods, while avoiding Atlanta’s middle-class and more affluent black areas. Some might call his assumption racist. Let’s charitably chalk it up, not to a racist intent, but to ignorance. Either way, the effect is the same.

For the record, all low-income areas (and high-income ones, too) were left out of our study entirely. We compared white middle-income areas with black ones.

Your readers can do what Mr. Masterson did not: You can read “The Color of Money” for yourself at http://powerreporting.com/color. The article “How study of home loans in metro Atlanta was carried out” explains the methodology. (You’ll also see that the articles were published in 1988, not 1989. Mr. Masterson seems to have written without access to reference books or a computer.)

A loosening of credit standards in recent years, as loans (mostly to white borrowers) were packaged and sold to Wall Street investors, may or may not be tied to the anti-discrimination efforts of the 1980s. Mr. Masterson is entitled to his opinion, but not to his own facts. My article pointed out how banks were avoiding good money to be made in middle-income neighborhoods.

Best,

Bill Dedman