Daring To Say Loans Made No Sense

by David Carr - September 28th, 2008 - The New York Times

Sometimes, if you want the real answer, you have to ask a dumb question.

Alex Blumberg, a producer at “This American Life,” a public radio show that specializes in old-fashioned storytelling about local slices of Americana, has never owned a house or had a mortgage, let alone covered the financial industry. Nonetheless, he was fascinated as he watched the subprime mess unfold.

His dumb question? “Why are they lending money to people who can’t afford to pay it back?”

It turns out the answer is "Because they were black and they would call you racist if you refused to loan the money." See Financial Affirmative Action to see how the intimidation was applied. Since for the bankers it was OPM (Other People's Money) the Bankers made the loans. That was the easiest way to get out of the limelight. For any one loan it was no big deal. When the volume of bad loans reached a critical point, it destroyed the American Real Estate Market. Now it turns out the people who got the loans are not responsible. It was the evil bankers who, at government insistence, loaned the bad credit risks the money to buy a house that were the criminals.

They were racist if they turned the loan down just because a minority borrower could not afford the loan and evil if they gave the minority borrower a loan they could not afford. Sound like Catch-22?

Now it is being made Catch-22 for taxpayers.

Almost no one is willing to say what happened in this crisis. If you do, you will be accused of being a racist, just like the bankers were accused.