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Tuesday, March 01, 2016

Obama failed black people by not fixing the housing crisis

Ezra Klein of Vox had an interesting take on the housing crisis, in which people who did not qualify for mortgages were given them anyway at the urging of government.




From Ezra Klein:
The mortgage meltdown that preceded the Great Recession decimated minority wealth in my neighborhood, a majority African-American suburban community in South Chicago. Housing prices fell, and remain more than 30 percent below what they were in 2006. Our area is still dotted with dozens of fading for sale signs, sometimes in front of foreclosed or empty homes. Things never fully recovered.
Race and segregation play a big role in this story. Five of the 10 Chicago zip codes with the highest foreclosure rates are at least 94 percent African-American.
And this is a national problem. As one shocking 2011 report concluded: "Approximately one-quarter of all Latino and African-American borrowers have lost their home to foreclosure or are seriously delinquent, compared to just under 12 percent for white borrowers."
So in other words, the Bush administration and a Democratic Congress gave people mortgages they could not pay in some sort of vague notion that this would help them. And President Obama -- who helped create this mess -- has spent seven years running away from the problem.

10 comments:

  1. I believe that Bush did try to stem the tide but Barney Frank was too powerful in a Democratically controlled Congress and stopped it. Schumer has his hands dirty on this too.

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    1. Yes. IIRC, your history is off, Don. The Bush admin repeatedly tried to curtail subprime lending, but Congressional Dems wouldn't act on the matter.

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    2. They insisted Fannie and Freddie KNEW what they were doing.

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  2. The problem is not the housing market. The problem is the failing education system and its "downstream effect" on employment. People who get a good education usually can get a good job with decent pay. People who have good job and a decent income can usually afford to own their own home. The problem begins with our system of public education, a monopoly that has long been in the hands of the Democrats and their union supporters. The solution is not more money. The solution is wiser use of the money we already spend. A voucher system that lets parents choose the school they want for their kids and ensures the money follows the student would generate enormous benefits for public education. To borrow a phrase, education is upstream of the housing situation: better educated kids would lead to more skilled adults who hold better jobs and receive higher pay that would make home ownership much more affordable in the future.

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    1. Yes and people with a good education would not encumber themselves with mortgages they couldn't afford....or at least they would have the math skills to know better.

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  3. Please note that in the 90's the practice of not loaning money to people that could not afford to pay it back was called "redlining" if the person was black band lived in one of those 5 zip codes in Chicago. A community organizer named Barack Obama led a lawsuit against the prominent banks that did not lend money. The Clinton administration supported the lawsuit which ended with a consent agreement with the banks.

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  4. From 2003
    http://www.nytimes.com/2003/09/11/business/new-agency-proposed-to-oversee-freddie-mac-and-fannie-mae.html?pagewanted=3&src=pm

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  5. As I read the Vox piece, it says that Bush helped thousands of Black and Hispanics to get mortgages, who would not have gotten them 25 years ago and cannot get them now.

    Barack Obama turns back the clock for Blacks and Hispanics.

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  6. Investor's Business Daily's take:
    http://www.realclearmarkets.com/articles/2008/12/dont_blame_bush_for_subprime_m.html

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  7. The problem is not the housing market. The problem is the failing education system and its "downstream effect" on employment. People who get a good education usually can get a good job with decent pay.
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