Sunday, March 1, 2009

Community Reinvestment Act is not to blame for Subprime Crisis

There are several blogs on the interweb attacking this one issue since it first came out this fall, I personally don’t agree with the terms of the CRA but am going to create yet another blog to discredit the misguided anger.
In recent times, the Community Reinvestment Act was falsely blamed for the subprime collapse.

Compliance Technologies reported that in 2007, 71% of subprime borrowers were Caucasian. Most of them are upper middle class speculators.

It's 2014 now, the NY Times hyperlink isn't working so here's the link to Compliance Technologies report:
See Page 7 to begin with...


Between 2004 and 2009, each race ceived in million subprime rate loans:

If this isn’t convincing enough, the HUD database has their occupations (realtors and real estate agents), their race (Caucasian) and whether or not they foreclosed on their primary or secondary residences. This information is out there.

Unfortunately the media wanted to put the blame of this enormous economic collapse on the poor minorities. Either they lack basic numerical reasoning capabilities or they assume we all do. Those who fell for that “argument” are functioning retards. And that’s putting it kindly. What research method did they use?

So who's spreading the misguided anger?
Karl Denninger
Larry Kudlow
Ann Coulter
Professor Stan Liebowitz
Forbes bought into it.
So did Open Market.
This one was absolutely disgusting.

The coined phrase “minority” is a smaller fraction of the whole. The coined phrase “poor” means they can’t get access to credit that would afford the amount needed to cause this collapse. The upper middle class speculators did!
This isn’t economics, it’s barely remedial algebra.

The politicians and the media could adversely affect the “poor minorities” even more throughout the course of the economic crash. They’re the last group that needs a “correction”. I don’t condone poverty pimps. History never showed how racism improved the economy. The segregation after the Civil War never fixed the plight of the war torn South. The Chinese Exclusion didn’t make the California economy thrive. The Holocaust didn’t make Germany a thriving nation. And guess what? We’re repeating history.

What these lies and intentional misrepresentations tells us is that these very politicians do not care if the economy improves. They only want to avert blame. By doing this, they add another hurdle to any true recovery the American people can hope for.

The “experts” of economists who supported this story lost a lot of credibility. This would include the Mises Institute.

Anyone with just a bit of common sense can see through this.

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