“In what appears to be the first legal action of its kind, an association of community-based organizations has filed a federal civil rights complaint against two of the three largest Wall Street ratings agencies, charging that their inflated ratings on subprime mortgage bonds disproportionately caused financial harm to African American and Latino home buyers.” (Kenneth Harney, Washington Post, Nov. 29; Hans Bader, CEI “Open Market”, Nov. 30).
P.S. Mickey Kaus (permalinks gone again, scroll to Dec. 1):
Hmmm. Didn’t community-based organizations push for exactly this sort of reverse-redlining? I think they did. It’s one thing to argue that they maybe weren’t the major cause of the subprime meltdown. It’s another for them to pose as victims wronged by the very system they worked hard to set up (including the securitization that enabled banks to keep up “reverse redlining”).
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The lesson here is to be wary of the word “community”, because invariably it is used to place a facade of popular support on someone else’s agenda.
Don’t these people realize that without subprime loans the poor people wouldn’t have been able to buy the house int he first place? Are they seriously saying that the banks should have given poor people favorable loans? Don’t they know that poor people get subprime loans bexause that’s the only loans they CAN get?
I think they DO know this, and they are greedy and looking for money for nothing.
They also strongly imply that blacks and hispanics get subprime loans because they are black and hispanic. How are they allowed to imply something so blatantly wrong?
This way it works is: the ratings agencies have money. The community organizations want money.
This doesn’t seem to be in federal court. Yet. It is an attempt to get administrative action. That may bully the rating agencies into a payoff. And it may well work.
The agencies will probably also agree to award a seat on their board to some already rich community organizer.
If you think community organizations are a front for social shenanegans, then look out for the ‘community organizer’ in chief.
This is where I provide a “non-comment.” If I write what I’m thinking, it will likely surface in a job interview twenty years from now and the spin will indefensible.