Saturday, January 16, 2010

An ACORN In The White House: Obama Putting Social Engineering Back Into The Economy

Those who cannot learn from history are doomed to repeat it.

- - Edmund Burke

Can you say SUBPRIME CRISIS - THE SEQUEL. On Christmas Eve, Team Obama announced that it was uncapping government guarantees for Fannie Mae and Freddie Mac, giving those institutions a blank check with our tax dollars and seemingly preparing the way for these institutions to again play major roles in driving our housing market. Now, our "post-racial" President is about to reinject race-based social engineering into the front and center of our financial system. This coming just a year and a half after the precise same practice, coupled with the government directed machinations of Fannie and Freddie, brought our economy to its knees. I've spent tons of pixels on this blog discussing the origins of our financial meltdown. The exceptional video below explains some of the basics in 3 minutes.

(H/T Hot Air)

Democrats' social engineering is the "but for" cause of our financial meltdown. As I have written previously, in summing up a very detailed post:

During the period 1977-2000, most of the elements of our current fiscal crisis were put in place. President Clinton turned a little known law from the Carter-era, the Community Reinvestment Act, into a tool of massive socialist engineering. Color-blind lending standards were eviscerated and new standards were enforced by the police powers of the government and through the enlistment of community organizers and their ilk. Fannie Mae and Freddie Mac were made the engines of the new social engineering, creating an ever-expanding market for mortgages founded upon the new "innovative" lending standards. All attempts by Republicans to attack this cancer failed. The left delegitimized and beat back every attempt to reform the CRA by recasting such efforts as racist.

As to [contributing factors, possibly] the most important but as of yet underreported aspect of the crisis, is how rating agencies of the era vastly underrated the risk of the toxic mortgage backed securities coming out of Fannie Mae. The repeal of Glass-Steagall actually strengthened some of the [defenses]. Credit Default Swaps, which developed unregulated during the Clinton era . . . [were] unable to withstand the widescale failure of the underlying mortgages, [particularly after the recent imposition of mark to market accounting rules.]

. . . [The] goal of "affordable housing" was laudable. Looking at this in retrospect, there were and are two ways to approach this issue - one from a capitalist and market based approach and one from a socialist and redistributionist approach. The former would have been a series of programs to repair credit and to assist individuals with amassing savings for a down payment. The latter, well, that was what the left was able to enact.

Yet today, Democrats are in the midst of trying to wipe not merely their responsibility for our financial meltdown from the historical record, but to claim that the fault lies completely with deregulation and derivatives. This is not merely an exercise in assigning blame, for what our graduate of Acorn in the White House wants to do is double down on the social engineering. This from the NY Times:

The Justice Department is beginning a major campaign against banks and mortgage brokers suspected of discriminating against minority applicants in lending, opening a new front in the Obama administration’s response to the foreclosure crisis.

Tom Perez, the assistant attorney general for the department’s Civil Rights Division, is expected to announce Thursday in New York that the administration is creating a new unit that will focus exclusively on unfair lending practices.

“We are looking at any and every practice in the industry,” Mr. Perez said in a recent interview.

As part of an expansion of the Civil Rights Division approved by Congress last year, the Justice Department is hiring at least four lawyers and an economist for the new unit, while about half a dozen current staff members will transfer into it.

Mr. Perez plans to formally announce the new unit at the “Wall Street Project” conference organized by the Rev. Jesse Jackson’s Rainbow/PUSH Coalition. He characterized the effort as a major turnaround, and criticized the previous administration as failing to scrutinize lending practices amid the subprime mortgage boom.

While past lending discrimination cases primarily focused on “redlining” — a bank’s refusal to lend to qualified borrowers in minority areas — the new push will instead center on a more recent phenomenon critics have called “reverse redlining.”

In reverse redlining, a mortgage brokerage or bank systematically singles out minority neighborhoods for loans with inferior terms like high up-front fees, high interest rates and lax underwriting practices. Because the original lender would typically resell such a loan after collecting its fees, it did not care about the risk of foreclosure.

It is a rarely used theory, and it carries political risks. Some critics have contended that government rules pushing banks to lend to minority and low-income borrowers contributed to the financial meltdown. The campaign could rekindle that debate.

“They encourage lenders to make risky loans for reasons such as diversity, and then when lenders have a problem because they made too many risky loans, they condemn them for that,” said Ernest Istook, a fellow at the conservative Heritage Foundation and a former Republican congressman from Oklahoma. . . .

Under federal civil rights laws, a lending practice is illegal if it has a disparate impact on minority borrowers, and the Obama administration is signaling that it intends to make the enforcing of fair lending laws a signature policy push in 2010. . . .

Neither racism nor reverse racism have any place in America. Actual cases of improper discrimination need to be dealt with by an iron fist. But the disparate impact theory, that is a different beast entirely. What it means is that, even if a bank can show that every lending decision it made was based on commercially reasonable, colorblind lending standards and that its decisions were made without any reference to the race of the applicant, the bank can still be fined and subject to other penalties if, statistically, it did not make enough loans to low income individuals or in low income areas. This is the same legal theory that the Supreme Court all but completely struck down in Ricci v. Destefano several months ago. That case dealt with limitations on the disparate impact theory in employment decisions. Disparate impact is also the same legal theory that our government relied on to cause the subprime crisis in the first place. In light of Ricci, this is something that cries out for a court challenge on Constitutional grounds.

This is merely Obama's latest existential attack on an economy already gravely ill and with no signs of recovery in sight. It falls perfectly in line with his attempts to socially engineer our economy through health care and cap and trade. But as bad as the latter two portend to be, we know beyond doubt just how much damage the former has already caused. Moreover, Obama is simply too much the ideologue to learn the lessons of history. 2012 just can't come soon enough. In the meantime, it would seem the best way to combat this latest assault lays with our courts and with our elected representatives.


OBloodyHell said...


Barack Obama and the Strategy of Manufactured Crisis

Can there really, really be any question left?


OBloodyHell said...

> Discrimination has no place in America.

Discrimination has EVERY place in America. It has no place only when it's "unfair" -- that is, not based in reason or cause directly tied to the discrimination being made.

If black males are massively more likely to commit crimes, then yeah, sorry, it's not unsurprising that, until black males find themselves "the usual suspects". If Muslims are massively more likely to commit terrorism, then, yeah, sorry, it would be -- and is -- irrational to NOT focus on them as the most likely source of a terrorist attempt.

That we fail to do this is one of the main problems, instead subverting rational discrimination in favor of some idiotic ersatz politically correct non-discrimination.

It's the failure to properly discriminate -- and to teach such discrimination in schools that causes everyone -- blacks included -- to have major problems.

Rational discrimination is your friend.

And its been a policy goal of postmodern liberalism to make everyone forget that.

OBloodyHell said...

it's not unsurprising that, until black males find themselves "the usual suspects".

Doh! "'s not unsurprising that, until black males change that fact, that they find themselves 'the usual suspects'...."

GW said...

Hah. You've caught me in a semantic failing I have blogged on several times before. Corrections made.