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Jan. 14, 2021 - Epoch Times
10:44
What the Community Reinvestment Act Actually Did for Black Americans
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Reparations?
Are you kidding me?
In many ways, America's already paid them.
Whether you're talking about race-based preferences or set-asides or the role reparations played in the Great Recession.
You see, because of the Community Reinvestment Act signed into law by Jimmy Carter and given teeth by Bill Clinton, a lot of people who otherwise would not have qualified for loans under normal lending criteria got them.
A large number of them were minority borrowers.
I don't think the whole debate ought to be about affirmative action.
Look at what we've done, for example, with Something that's supposed to have a civil rights impact that's largely economic, the Community Reinvestment Act, passed in 1977, over 20 years ago.
Now, the Community Reinvestment Act was set up to say to the bank regulators, look, you guys go in and look at these banks and tell them, you've got to take some of your money and invest it in inner cities and neighborhoods and with people who otherwise would not get it so they have a chance to build homes, to build businesses, to create jobs, to build neighborhoods.
In the 20-year history of the Community Reinvestment Act, 85% plus the money loaned out under it to poor inner city neighborhoods have been loaned in the five years since I've been president.
As did Senator Barack Obama.
The Community Reinvestment Act is oftentimes not enforced as it should be.
We've got to open up bank branches.
We've got to give people access to financing so that they're not going to a payday loan operation.
But was this a good idea?
To entice people who otherwise would not have been able to afford a mortgage into getting one.
And by the way, these mortgages were then repurchased by the government-sponsored entities, Fannie and Freddie, giving banks also a carrot to make these loans.
So it was a combination of sticks and carrots.
Again, was this a good idea?
But I want to say this.
The subprime mortgage was essentially invented After the 1995 amendments to the Community Reinvestment Act, which put a gun to the head of all lenders, banks and non-banks, it said you must, you must make subprime loans, below prime loans, at favorable interest terms to low-income people, to downright poor people, to immigrants.
Can I respond to this?
No, I want to finish this point.
I want to get this out on the table.
It's been bugging me for a long time.
Jerry Boer is the only one who got this story right.
This meant that, in fact, if these lenders did not make these subprime loans, their business plans would be disrupted.
They couldn't acquire.
They couldn't merge.
They couldn't go into new markets.
And it gave inordinate power to local community groups, like the Acorn Group, to essentially rat out the lender and tell the Fed and the controller of the currency that you guys, they're not doing what you want them to do.
Let's take a step back, shall we?
Why did Congress pass and why did Carter sign the Community Reinvestment Act in the first place?
Answer, because of plaintiff's lawyers like then-attorney Barack Obama, who filed a class-action lawsuit against Citicorp arguing that his plaintiffs were being denied loans because they were black.
186 got settlements.
How did those 186 plaintiffs turn out?
Not so well, according to The Daily Caller.
President Barack Obama was a pioneering contributor to the national subprime real estate bubble, and roughly half of the 186 African-American clients in his landmark 1995 mortgage discrimination lawsuit against Citibank have since gone bankrupt or received foreclosure notices.
As few as 19 of those 186 clients still own homes with clean credit ratings following a decade in which Obama and other progressives pushed banks to provide mortgages to poor African Americans.
End of quote.
In fact, two of his clients say that there ought to be a law stopping banks from lending money to unqualified would-be borrowers.
If you see some people who don't make enough money to afford the mortgage, why give them a loan?
Ask Obama client John Buchanan.
There should be some type of regulation against giving people loans they can't afford.
Banks were too eager to lend to many who didn't qualify, said Don Bias, another client who saw banks lurch from caution to bubble-inflating recklessness.
I don't care what race you are, you need to keep financial wisdom separate from trying to help your people, said Bias, an autoworker." How bogus was this narrative that credit-worthy borrowers were being denied loans by racist banks?
Here's what the Cato Institute said back in 1999, well before the so-called Great Recession.
That act was originally meant to deal with redlining, the alleged refusal of banks to lend to residents of poorer urban, often racially minority areas.
But there is no evidence that such discrimination exists.
And lots of evidence that the act harms both banks and their customers." So by pressuring banks to lend to borrowers who otherwise would not qualify, government created a monster.
A monster that would not have existed but for government intervention.
Peter Wollaston was a member of the Financial Crisis Inquiry Commission.
Here's what he said.
Without the government's housing policy, There would never have been a financial crisis.
That's not exactly the same thing as saying that government housing policy caused the financial crisis.
It's stating it another way, and that is, if we hadn't had the government's housing policy, but for the government's housing policy, there wouldn't have been a financial crisis.
Now, minorities in particular were hurt because, again, without changing lending criteria, they wouldn't have been able to afford the home in the first place, would have been far better off renting.
But any time anybody suggested this was unfair, they were quickly slapped down as alarmist, if not racist.
But I have seen nothing in here that suggests that the safety and soundness are an issue, and I think it serves us badly to raise safety and soundness as a kind of a general shibboleth when it does not seem to me to be an issue.
Blacks really got clobbered.
Between 2010 and 2013, blacks lost nearly one-third of their net worth.
This is from the Pew Research Center.
From 2010 to 2013, the median wealth of non-Hispanic white households increased from 138,600 to 141,900, or by 2.4%.
Meanwhile, the median wealth of non-Hispanic black households fell 33.7% from 16,600 in 2010 to 11,000 in 2013.
Among Hispanics, median wealth decreased by 14.3% from 16,000 to 13,700.
We found that over the last 10 years, black people have lost ground in every major economic category.
In every major category, black folk have lost ground.
Now clearly, one cannot lay that exclusively at the feet of Mr.
Obama.
There was a headwind of obstructionism.
That's true.
But his most loyal constituency didn't gain any ground over the last 10 years, and that saddens me in a way that I can't even describe.
Mr.
Varney tried to explain to Mr.
Smiley the issue is growth, not income redistribution.
That what you're missing here is economic growth.
President Obama went for fairness, spread it around.
If he'd have gone for economic growth, everybody would have been better off.
Now, in 2012, I tried to explain the pro-growth agenda to Tavis Smiley and to Cornel West.
Two against one, so it was a fair fight.
Here's what happened.
Here's what I find puzzling, Tavis, about your analysis.
I know you're not a fan of Ronald Reagan.
You once said that Ronald Reagan, quote, tortured blacks, end of quote.
Ronald Reagan did not have a specific black jobs agenda.
What he did was cut taxes very deeply.
He slowed down the rate of government spending, and he continued and accelerated deregulation policies that had been started by Jimmy Carter.
The black adult unemployment rate fell faster than the white adult unemployment rate.
The black teenage unemployment rate fell far faster than did the white teenage unemployment rate.
Black businesses were created at a rate faster.
Their revenues grew at a rate faster.
All because Ronald Reagan dramatically cut taxes, dramatically reduced the rate of domestic spending, and he deregulated.
This president is doing the opposite.
He has spent money.
He is taxed.
He's threatening to increase taxes even more.
He's imposed billions of dollars in regulations.
And fast forward two and a half years later, we got 9.1% unemployment.
And during the Reagan era, Tavis, Unemployment, in fact, was even higher than the highest during this Great Recession.
So I don't understand why it is that you don't say the agenda ought to be what Ronald Reagan did.
The short answer is this.
You're awfully good at this.
That's why you've been doing it for 17 years.
Nice try with respect.
But Ronald Reagan decimated this country.
I don't know what America you were living in respectfully during the Reagan.
Decimated?
He decimated America economically.
In what way?
In what way?
Give me one way.
Give me one way.
The one thing that Ronald Reagan did for people of color was to support the earned income tax credit.
But every other stat you cited, we don't have time on radio to go number for number, but every stat you cited vis-a-vis people of color does not measure up when you talk to the people of color who had to live through the hell of those eight years of Ronald Reagan.
What do you mean talk to the people?
I've just given you labor stats, census stats, These are facts, Tavis.
Unemployment fell faster in the black community than in the white community.
It fell faster for teens.
It fell faster for adults.
It fell faster for Hispanics.
And you're telling me when you talk to people, they don't like Reagan, so therefore the stats go out of the window?
Larry, your numbers are not true.
When I get back to my office later today or tomorrow, I'll send you some more numbers.
You know this.
Numbers don't lie, but people do.
The numbers are very clear.
You're not calling me a liar, Tavis.
No, I'm saying numbers don't lie.
People do.
You want to take it outside?
No.
I'm saying the people who provided you those numbers put a spin on those numbers.
Again, that was in 2012.
As far as Mr.
Smiley sending me the accurate numbers, well...
I'm waiting!
I'm Larry Elder, and this has been the Larry Elder Show for Epoch Times.
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