Did you know that financial crisis was all the fault of minorities? Neither did I, until Fox News’ Neil Cavuto revealed the shocking secret behind the collapse of our economy: the colored folks did it!
Neil Cavuto, host of Fox News’ Your World, conflated giving home mortgages to minorities with risky lending practices, suggesting that efforts to increase homeownership among minority borrowers contributed to financial problems at Fannie Mae and Freddie Mac. Discussing the decision by the U.S. Treasury Department and the Federal Housing Finance Agency to place Fannie Mae and Freddie Mac into conservatorship, Cavuto asked Rep. Xavier Becerra (D-CA) on September 18, “[W]hen you and many of your colleagues were pushing for more minority lending and more expanded lending to folks who heretofore couldn’t get mortgages, when you were pushing homeownership … Are you totally without culpability here? Are you totally blameless? Are you totally irresponsible of anything that happened?” Cavuto later said, “I’m just saying, I don’t remember a clarion call that said, ‘Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster.’”
I can’t wait for the sequel from Lou Dobbs: Don’t forget the illegal aliens!
I know this guy is a hack, but they’re doing everything to try to spin this and avoid the blame they so rightfully deserve.
How the Democrats Created the Financial Crisis: Kevin Hassett
Cavuto takes his cue from McCain who blamed the black guy, Obama, for this financial destruction, who profited from it.
that’s the meme…the black guy….including Raines…one thread BLACKS.
So distracted by the bubblevision Americans, we fail to see the reality.
Someone needs to send cavuto this talking points memo bit and this one from bloomberg.
John McKKKain’s campaign is up to its eyeballs in Fannie and Freddie lobbyists.
I could understand why liberal Democrats would want to expand mortgage opportunities for ordinary working people, but my impression is that many of the homes foreclosed on were well out of range even under adjustable mortgage rates for the working poor. It is otherwise a great idea in principle to help people attain home ownership.
Anyone have any data on the average value of foreclosed homes?
I disagree that there is value in promoting home ownership. What we should be promoting is shelter for every American that wants it and cannot afford it. Promoting “ownership” distorts market forces and has indeed been part of the reason for the bubble (the securitization of mortgages was probably the biggest factor). Putting someone in a home they cannot afford is not doing them a service. Quite the opposite in fact. If we want to subsidize housing we should give deserving people vouchers (which is better than rent control) that they can use to rent or to buy. Why is there shame in renting? Why should the government promote owning over renting?
But the FOX Republicans are wrong to blame it on minorities. It’s not just “subprime”, it’s all of American society that bought into this idea that they could purchase a much bigger home than their income could support and the magic appreciation fairy would give them free money. Homes are to live in. Period.
Much of America drank the Kool-Aid. These Kool-Aid drinkers were not predominately black. They were all of America. Just look at the lily-white suburbs in Califonria where millions of Kool-Aid drinkers bought into the American dream of free money. And we should not be bailing them out. In many cases these people facing foreclosure got much better deals than the people that rented and saved their money.
Why should the government promote owning over renting?
It depends on whether or not you believe that people take much better care of homes they own than homes they rent. I can’t say that I’ve seen studies on that but anecdotally* the houses in our neighborhood that are owner occupied (~1/2) are on average better kept than those that are rented. I don’t necessarily endorse the idea, and I’ve taken very good care of places I rented, but it seems pretty obvious where the theory comes from.
*i.e. not real data.
I don’t disagree with some of the things you stated.
But as a liberal-socialist, it is my view that one role of government is to permit the majority of working people (and the disabled) a reasonably good life. Part of that view is that all families and perhaps individuals should be able to own their own homes if they choose to do so. There is nothing wrong with renting a place to live if one so chooses to live through the investment of some owner and pay his mortgage.
Of course quite a few Democrats have bought into the idea of free market competition and that the value of your work is also set by the market. That idea, however, also means that in spite of working hard, a person may end up “poor” no matter how many hours or jobs he undertakes. Income and wealth inequality is now exceeding the highest levels it has ever been in the US, in the 1920s.
I’m therefore a living wage advocate, and if we ever did have such a law, I don’t think we would get into the financial predicaments like the one we are now in, which was not determined by common good but by greed.
My views are not all that different than yours. I guess where we differ is when and at what level a liberal/socialist government should provide support to it’s citizens.
I’m all for a living wage and basic protections for working people. Part of this is housing/shelter. I think we should provide a safety net. Section 8 type housing for the poor and elderly. Only I would provide vouchers. Free, or fair, markets are indeed a good thing. What is not good is deregulating the mortgage/banking industry and then when the bubble pops bailing out the bankers that got us in the mess (along with small bailouts to the homeowners that made bad decisions–which is really designed to help the bankers as well).
I think Democrats need to get back to basics. Protect pensions. Protect labor unions. Protect our social security net. Fair progressive taxation. We need retirement security, socialized health care, and minimum shelter and food for those that need it.
The rest we should leave to the free market but we should regulate the free market to ensure that it’s fair.
This comment is slightly off tropic.
Today is an ordinary day for millions of Americans who were born US citizens but it is not an ordinary day for Alma Cardenes one of my co-workers at a predominately Hispanic grocery store in South Tucson where we both work.
For you see today at 11:00am PST Alma will take the oath to become a US citizen. Alma is a hard working mother of two with 10 grandchildren who of course has waited years for this day.
So at 11:00 any of you who read this please think of Alma as she celebrates this special day in her life and take a minute to be thankful for the priviledge we natural born citizens were given which Alma has worked so hard for.
I’ll be there! One of my best friends will also be taking the oath.
While it disgusts me, it really doesn’t surprise me much. I thoroughly expect Lou Dobbs to blame immigrants-and I’m not surprised there’s a push to blame minorities either. It’s typical Gop spin. You will notice though how republicans are never to blame for anything. Have you ever tried to blame a republican for anything? Impossible to do.
I have been texting my GOP pals about the free market and govt bail out. Not too many have responded. Everything that they have ever believed in political theory had vanished in front of their very eyes.
I’ve noticed the same thing. The hard-core Republicans I know (and who I happened to warn about the impending financial crisis over last Christmas and even before–they didn’t listen then) have been walking zombies.
Their world is turned upside down. For the life of me I don’t know why the Democrats aren’t hitting these Conservatives while they’re stunned. They need to repeat this over and over: “The Republicans have brought the largest socialist bailout in the history of the World to America. Whenever they prattle on about free markets just remember they are lying and they really want to take the American taxpayers money and give it to their friends on Wall Street.” That should be played on a loop with John McCain saying: “My friends, there will be other wars.” Over. And. Over.
It’s so simple it makes one wonder why the Democrats aren’t doing it.
I’d really like to ask these guys if they really think that Wall Street gave out $700 BILLION DOLLARS worth of subprime mortgages to poor people.
Really?
We’re talking about $700 BILLION DOLLARS here. There’s no way in HELL that this problem is caused by any kind of relaxed lending standards to poor people, unless by “poor” you mean “Goldman Sachs and Bear Stearns”.
These guys are morons.
No, they’re not morons at all. They know exactly what the want to achieve: make the minorities the scapegoat for the failure. They are instead nasty bigots, plain and simple. Very nasty people.
Well, it’s partially correct. The fact of the matter is that loans were made that had no chance of being paid back. So who is to “blame” for that? My answer is both of the parties. If this were a jury trial to figure out both parties comparative fault I would put the fault at about 75% for the bankers and about 25% for the people that made ridiculously poor financial decisions and bought houses they could not afford. And unfortunately many smart people made poor decisions–including subprime people, near prime people, and yes even prime people. White, black and everyone.
All of these parties speculated and made risky financial decisions. The “homeowners” (really homedebtors) had an advantage in that our laws protect them a little bit and they can always give the house back to the bank in lieu of paying back all of the money they borrowed. So I don’t see why we need more protection for them. They made a poor decision and they are protected.
But the real guilty parties are the bankers. The real tragedy is that the U.S. taxpayer is transferring its wealth to these bankers that made bad financial decisions. These are the same bankers that wanted to punish debtors in bankruptcy proceedings and wanted laissez-faire capitalism for average citizens and consumers. Now they want special socialist protection. If we are going to have socialism why can’t we take over a profitable corporation like Exxon? Why are we taking over the most debt-ridden firms? That’s insane.
I’m spitting mad as I see the basic guiding principles of our economic system being blithely jettisoned. “Free-market” capitalism as the bankers make obscene profits and then socialism when the bankers lose money.
And the Democrats going right along. Per usual.
Actually, in most states, debtors are on the hook for the entire loan amount, less whatever the foreclosure sale brings. Banks rarely bid the full value of the loan unless they have an appraisal that demonstrates surplus equity. So for those homes where there is no equity (or negative equity) most borrowers will still be liable for the balance. Your state may be different, but this is the situation in most states I’m aware of.
Only if the loan was non-recourse (i.e., payable only out of the value of the property) would a debtor get off from all liability as the result of a foreclosure sale. Usually only real estate developers with cozy relationships with their bankers get that kind of treatment.
Yeah. I see that about 12 states have non-recourse statues and a few others have “one-action” statues that offer some protection. I guess since I’m in California I assumed I was in the center of the universe.
I suppose it’s true that those who are taken in by swindlers share some portion of the blame, but we spend public resources to try and bring them some measure of justice and/or reparation. In that sense, protecting mortgagees to some degree only continues that pattern. My problem with some of the “bailing out homeowners” ideas is that the reparation should come at the expense of the financiers, not the taxpayers.
Dems need to stand up and force financiers to readjust rates and freeze foreclosures for 3 years if they want to get in line at the trough.
If you have any lingering suspicion that the blame is anywhere near equal, you might want to listen to the best insight I’ve seen — a This American Life episode from back in May.
Freezing foreclosures is a terrible idea. Look. People go bankrupt every day. People make bad financial decisions every day. I have credit card debt that I am attacking like a fiend. I made a mistake by taking that debt on and I’m almost done paying it back. But should you as a taxpayer pay my debt off for me? I was just as much of a victim as other suckers. I got a credit card in college before I was earning much money. The CC companies have preyed upon me for years. Can I have some government money too?
If someone is going bankrupt and facing foreclosure then sure, I don’t want to throw them on the street with no shelter. Let’s change bankruptcy law so that people that can no longer afford to pay back their debts can have these debts wiped clean and to start over. I’m all for that. I advocate that. Part of the reason I’m leaving the Democratic party is because they changed the bankruptcy laws and usury laws protecting citizens.
But blindly stopping foreclosures is not the solution. Some people made bad mistakes buying a home they couldn’t afford. They will be stuck for years to come because they overpaid. It is much better for our society to let home prices fall to where the fundamentals support them. For decades homes have appreciated at about the same rate as income has appreciated. This is as it should be. It’s based on fundamental valuation. Now that the bubble is popping the instinct is to put our finger in the dyke and to keep the bubble inflated. This is wrong. We are much better off letting them fall quickly. Then people can begin to buy homes again at fundamentally sound prices. By propping up home prices artificially you are just setting up more suckers. You want some sucker to come along and pay a higher price so that you can relieve the current sucker that overpaid for his home. We are much better off to have the current suckers take their lumps (while providing basic safety nets to those that need it) so that we can stop being a nation of suckers.
You didn’t say if you’d apply the same standard to victims of other kinds of swindles. If somebody gets caught in a phishing scheme, for example, is that just the way it goes, and they should have been more careful? Or does government spend resources to try and recover the stolen money and make an example of the perps?
I guess where we differ is that it seems clear to me that much of the housing bubble was a direct result of deliberate, dishonest manipulation by mortgagors and their financiers. I’m not advocating freezing all foreclosures — just forcing mortgage holders to rescind predatory rates and stretching payments to give their victims time to at least have a chance to break even.
There are different types of swindles. Outright fraud is against the law and we currently have laws on the books prohibiting this. There are lawsuits on the way and these fraudsters should be punished. I imagine a good number of mortgage “professionals” and bankers participated in these frauds and should and will be punished.
But much of this is classic soft-swindling. The too-good-to-be-true deal that a lot of people bought into. The people that saw a 20 something year old putting zero down on a new home only to make a fortune in appreciation. People drank the Kool-Aid of free money. They knew what they were signing. They knew they were taking out loans for obscene amounts and that the payments were back-loaded. They knew there was a chance home prices could go down. They knew that they couldn’t afford the payments if they were paying a classic 30 year fixed rate.
But I would much rather see any socialist bailout go to homeowners rather than the bankers who knew even better than the homeowners. I actually don’t want any bailout of either the banker or the sucker homebuyer–other than a return to the bankruptcy laws of yore and the restoration of our usury laws. And maybe non-recourse statues across the U.S.
I would much rather have judges rescind predatory rates and do “cram downs” in bankruptcy proceedings than provide a bailout to the bankers or a freeze on foreclosures. Many of the homespeculators facing foreclosure are going to come out of this much better off than renters and savers that acted responsibly. Everyone that took part in the swindle deserves a little of the blame.
It is a problem to somehow assist the honest buyers and not the speculators. From what I see around me, it seems like the speculation aspect is being greatly exaggerated for political purposes. The people I know about saw this as an unexpected chance to finally own their own house. Their bankers and brokers insisted that this was so, this was their chance of a lifetime. Property prices were skyrocketing. If they missed this one chance they’d be shut out for good, they were told. Their government, meantime, was making it a moral duty to join “the ownership society”. To me, you’re too harsh on all the ordinary people who did what their banks and brokers and media and government told them was the smart, and even ethical, thing to do. (I hope you’ll listen to the radio show I linked above. It cuts through the theory and goes to what really happened from the retail to the corporate level.)
I’m no economist and don’t know whether letting the market play out with no government involvement would lead to a Great Depression level disaster or not. It seems possible. Part of me says this might be a good thing, long term, if it in turn led to the mindset that enabled the New Deal to happen. But the cost on the ground would be too much to bear, and nobody can predict what beasts would emerge from the chaos.
Nonetheless I think the only sane course now is to direct government funding away from the corporate wrongdoers and to social spending, including some relief for buyers with one property who got caught in a massive fraud — not a giveaway, but a chance to buy some time.
I listened to the program and it does a good job explaining what happened. It is in line with my understanding of this mess.
I have sympathy for these homedebtors. I know they were “victims” of their own stupidity and that they foolishly put their trust in mortgage brokers and a system that promised them easy money for nothing. If you offer deals that are too good to be true there are a number of people that will fall for it. It’s human nature. Many of us have to learn this hard lesson in life. I’m not without sympathy but we can’t protect people from all of their poor decisions. I’ve made poor financial decisions as well and why shouldn’t I get a windfall from my poor decision as well? Home speculators are no more deserving than the guy that bought a bunch of stock that is now crashing.
We need to get back to basics.
Buying assets has an inherent risk. Every citizen should be aware of this and is responsible for understanding that there is risk to purchasing assets. If you buy stocks or a home or a car or a bond there is a risk that these assets may decrease in value. That’s why we have social security and responsible people, like my Depression-era Grandparents, invested in safer, more conservative assets like CDs or savings accounts or annuities or life insurance policies which the government guarantees or regulates. Same with pensions. The government regulates these (in theory) to ensure a conservative but stable return. These are safe investments. I am all for the goverment protecting these assets. If a company promises a pension than a person should expect the company and the government to follow through on these promises. Same with savings accounts and CDs under $100,000.
The “ownership society” was all about throwing out traditional ideas of conservative investing and encouraged us all to speculate in the stock market or whatever the bubble of the day was. The housing bubble was the biggest and baddest bubble of all. I know that lots of people got hoodwinked. The Democratic party is probably the biggest sucker as it threw out it’s traditional economic platform for the allure of supply-side Republican free-market principles. We are all suckers because we let these scoundrels rule the roost. And we will all suffer.
But going forward we have to get back to basics. The bankers deserve nothing. NOTHING. We need to regulate the market so that we don’t let the bankers give usurious loans anymore. To the extent that the current home loans are usurious, let’s let the bankruptcy judge rework those loans. Or let’s let the banks have the houses back and wipe out the debt. But we are giving a windfall to house speculators if the taxpayers that weren’t suckers have to subsidize the speculators (even if they were well-meaning, innocent suckers). Many suckers extracted hundreds of thousands of dollars in equity and spent it on cars, vacations, etc. Many simply got to live in very expensive houses that they would never be able to afford otherwise. Many of these people will live rent free for months as they don’t pay their mortgages before foreclosure. Those of us renting and saving responsibly are subsidizing this. I think it’s more than fair that the banks get their homes back and the debtor/sucker/victim gets to walk away with his debt wiped out. Non-recourse statutes and the old bankruptcy laws are what is needed. Not a special bailout for people that took an unnecesary and stupid risk.
Caputo and his masters are running a very deliberate campaign to shift the blame from those responsible to the victims and those who didn’t even make the cut to be victims. This is just a retread of Reagan’s Welfare Queen crap — except this time it’s unworthy minorities and their liberal allies who drove the poor banks and financier class into meltdown and sabotaged the Magic of the Market.
If the other faction of the GOP mob ever faces reality, it will be The Minorities’ fault that Jesus STILL didn’t come snatch them up to heaven. In both cases, true believers can’t survive their silly beliefs being proven wrong, and the best way to deny it is to go after the traditional American scapegoats. Of course the Jesus-waiters do have the advantage of a bigger menu of scapegoats — it’s kinda hard to blame the gays and the fornicators and the biologists for the fall of the financier class. But they might just find a way.
At one level, though, the Caputo/McCain mob got something right. It’s likely that this disaster would have been avoided or mitigated if timid liberals had stopped with the pandering to every identifiable subgroup with narrow “special” benefits, when what’s clearly needed is full-bore socialist redistribution of wealth. Do we still need more evidence that the Top 5 Percent’s value to society is absolutely inverse to their level of privilege? The current disaster is the best chance we’ll have in a very long chance to fix that.