Tuesday, September 23, 2008

Scapegoat of the month: minorities

Conservatives have finally figured out just who to blame for the current financial mess. Now, I guess I'm kind of naïve. I had assumed it had something to do with banks taking in loan origination fees and then reselling the loans, giving them no incentive to make sure people could actually make the payments. And I figured banking deregulation, a flawed understanding of the risks involved in "innovative" mortgage-backed securities, and overall greed might have something to do with it, too.

It turns out I'm completely wrong. According to conservative pundits, the real culprits are those pesky minorities.

Fox News host Neil Cavuto seems to have been one of the first to put forward this particular talking point. On September 18, while talking to Rep. Xavier Becerra about the problems encountered by Fannie Mae and Freddie Mac, he said, "loaning to minorities and risky folks is a disaster." WorldNetDaily soon picked up the same theme, writing that a forthcoming book by Stan J. Liebowitz "contends that the federal government over the last 20 years pushed the mortgage industry so hard to get minority homeownership up, that it undermined the country's financial foundation to achieve its goal." The same day, the Wall Street Journal printed a letter to the editor that made the same point, asked rhetorically if we're "willing to crash our economy over some misplaced idealism," and called for Congress to rescind the Community Reinvestment Act of 1977. This letter was picked up by a few conservative bloggers, none of whom bothered to ask why, if the CRA were the problem, the bubble in the housing market didn't start until over two decades later. On Monday the National Review's editorial page weighed in, blaming the CRA and "political extortion" by community organizers for the financial collapse — a nice bit of sleight of hand that let them bash Sen. Obama, who used to work as a community organizer. Finally, Monday night on The Savage Nation, Rick Roberts jumped on the bandwagon by asking that the government give "...a full accounting of how many of these mortgages that were defaulted on were made to people who shouldn't have even been in this country in the first place."

As Jon Stewart once put it, "Who knew this deck even had a race card?"


Note: This post has been edited to correct ambiguity over which episode of The Savage Nation was being referenced.

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