Shocking News: Subprime Lenders Took Advantage of Poor People and Minorities
Remember when conservatives tried to blame the subprime mortgage crisis on poor people and minorities? According to the conservatives' narrative, a 1977 law called the Community Reinvestment Act caused all of our problems by encouraging the extension of credit to poor people and minorities. The problem with that argument was that the vast majority of subprime loans were made by institutions that were not subject to the CRA, and studies have shown that the act has actually increased the amount of responsible lending to poor families. Even the Federal Reserve has posted research explaining that the CRA argument is bogus.
So why, then, do we keep hearing about poor people and minorities defaulting on subprime loans? Because, as it turns out, subprime lenders didn't need any encouragement to make predatory loans to people they thought they could easily exploit. The New York Times reports:
As she describes it, Beth Jacobson and her fellow loan officers at Wells Fargo Bank “rode the stagecoach from hell” for a decade, systematically singling out blacks in Baltimore and suburban Maryland for high-interest subprime mortgages... Wells Fargo, Ms. Jacobson said in an interview, saw the black community as fertile ground for subprime mortgages, as working-class blacks were hungry to be a part of the nation’s home-owning mania. Loan officers, she said, pushed customers who could have qualified for prime loans into subprime mortgages. Another loan officer stated in an affidavit filed last week that employees had referred to blacks as "mud people" and to subprime lending as "ghetto loans."