The Washington Post (more accurately The Compost) ran one of its pathetic hit jobs today. Did The Compost target a particular politician? No. Instead, furthering the cause of statism, they attacked the mortgage lending industry for a problem largely created by government. In Broken by the bubble, The Compost presents us a tear-jerking story about well-paid people who during the housing boom in 2006 and 2007 bought more expensive houses than they could easily afford. Therefore, when the bubble burst, they could not continue their payments, and the banks foreclosed on them. That, of course, made their foolishness the fault of “predatory lenders.” In fact, it makes it the fault of racist predatory lenders.
Marsh, uniquely trained to understand just such a neighborhood transformation, can see both sides of the equation.
“As a resident, I welcome and celebrate the socioeconomic and family type of diversity present in Fairwood,” she said in an e-mail to The Post. “As a sociologist and demographer, I am troubled that Fairwood was hit hard in the housing crisis, especially given the number of black Fairwood residents. It begs the hypothetical yet sociological question: Would the same magnitude of predatory lending have taken place in Fairwood if it were a predominantly white middle-class area?”
Subprime loans were largely prohibited until Congress in 1980 passed legislation lifting state interest rate controls on out-of-state banks.
At first, just a handful of small lenders made subprime loans. But as investors in the 1990s sought more mortgage-backed securities, which bundled subprime loans with other loans, demand grew. The high rates of return on the securities quickly made subprime loans the darlings of Wall Street. (from here)
Keep in mind that this a story about homes once valued at $700,000 purchased by people with median incomes of more of than $170,000. So we are not talking about naive citizens. Instead, we are talking about people who received subprime loans to buy expensive homes. In fact, what is ironic about the charges of racism is that the lenders probably felt pressured by the government to make subprime loans to minorities.
The Compost attributes these subprime loans to “predatory lending,” but who loans their own money to someone who cannot pay them back with interest? Nobody. Therefore, somebody bought the loans these “predatory lenders” were making. Who? Check out SOME BACKGROUND ON OUR FINANCIAL MESS. Our government and government sponsored agencies used our money to help create this mess, but is that what The Compost wants us to believe? No. We are just suppose to feel sorry for people who bought more house than they could afford. Yep! The taxpayer is suppose to be the big sucker and bail out everyone, even those predatory lenders.