By Darryl Fears and Carol D. Leonnig
Washington Post Staff Writers
Friday, October 3, 2008; Page A15
"Activists Angered By Blame For Crisis"Treasury Secretary Henry Paulson has been urged to counter inflammatory comments.
The head of the National Urban League is calling on Treasury Secretary Henry M. Paulson Jr. to refute statements by conservative politicians and pundits that subprime mortgages provided to minorities led to the financial crisis and a $700 billion federal rescue of Wall Street.
In a strongly worded letter to Paulson this week, Marc H. Morial said Paulson has "an obligation to correct the misinformation that is spread concerning the root cause of the current financial crisis."
Morial, a former mayor of New Orleans, said in an interview yesterday that the effort "to pin the subprime crisis on African Americans and Latinos" is a "big lie."
"It's an effort to shift the climate away from deregulation and the lack of oversight," he said. "The numbers are becoming clearer each day that a large number of people who ended up with a subprime loan
could have qualified for a prime loan. That's the abuse that's inherent here."
Morial said he has not heard from Paulson. A spokeswoman at the Treasury Department was forwarded an electronic copy of the letter but did not respond.
On the House floor, on cable network television and in Internet blogs in recent days, conservative politicians and commentators have traced the problem to the Community Reinvestment Act, or CRA, enacted in 1977 to extend loans to minorities who were historically denied homeownership.
Rep. Michele Bachmann (R-Minn.) lashed out against the act, reading from an from
Investor's Business Daily article that said banks made loans "on the basis of race and little else." Neil Cavuto, a business news anchor on
Fox News, recently made a similar statement. In an exchange on television with Rep. Xavier Becerra (D-Calif.), Cavuto noted that the congressman pushed for more minority lending to "folks who heretofore couldn't get mortgages" and asked, "Are you totally without culpability here? Are you totally blameless?"
Defenders of the act say claims that it encouraged risky loans and caused the foreclosure crisis do not square with the facts of subprime lending.
Only a tiny fraction of subprime loans made since 2000 were ever generated to meet the goals of the act, which requires banks and savings-and-loan institutions to provide credit to their lower-income clients as well as their wealthy ones, they said.
John Taylor, president and chief executive of the National Community Reinvestment Coalition, an umbrella group that promotes access to credit and affordable housing, said such claims "are on the level of Swift boat advertisements, except they are even less factual."
"People who are saying this don't understand lending, but they sure do understand the political process," he said. "They are trying to blame the victim, which is an old strategy that moneyed corporate interests always employ."
Profit, he said, was the motive.
"People did not do this lending for CRA purposes. They did it because it was profitable."
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/02/AR2008100204115.html_______________________________________________________________________________________
Are subprime rates higher than prime rates? Yes, they are. Does paying more, make it more likely to default? Yes, it does. Do rate differences create a self-fulfilling prophecy which results in banks raking in excess profits that were never due them? Yes, it does. It's called robbery. And there's nothing to protect individuals from it, b/c our transaction law is all written to benefit the lender.
The subprime "class" of lending needs to go. THEN, if everyone were charged the same rate, we could tell who is qualified and who is risky... later on down the road.
We do not have a system which is real, yet we keep using it.
The rate offered determines whether a person qualifies or not. Someone who qualified at the normal 5% will not qualify at a gouging 9%. Lots of people did not buy a house they couldn't afford, but rather they got a loan they couldn't afford - simply to pad bankers' pockets. It's that simple. These ARM loans were made to cover up the fact that borrowers were being overcharged. If they had been given the same fixed rate that other well-to-do borrowers got, this would not have happened.
What amazing nerve from these loan sharks!!!!! And the worst part is, this is our "standard practice". We allow this. We think this is "normal". Charging people nearly double for having a bad credit score is unjustifiable nonsense. These banks created a far bigger risk than they were claiming to prevent. They did not in fact prevent any risk, did they? No, the risk happened. Which shows that the whole rationale of charging more is bullshit.
Charging higher rates CAUSES defaults. Duh!People who don't need a break are given one on rates, and people who don't have a ton of money are charged MORE. Bullshit. Right there, is the class warfare. It's like charging someone who's on Easy Street $3 for a loaf of bread, but charging the struggling person $6. That is wrong! Which one is going to go broke? Which one is going to do better and better?
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