The new talking points

THE NEW TALKING POINTS…. For about a week now, Republicans have been looking for a way to blame the crisis on Wall Street on Democrats. The search hasn’t gone well — at one point, John McCain said Barack Obama was partially responsible, because he’d been “gaming the system.” The comment didn’t make a lick of sense, no one bought it, and McCain hasn’t repeated it since.

But conservatives kept on trying. In fact, the right seems to have finally come up with a new line: Democrats forced banks to give mortgages to low-income minorities, those low-income minorities couldn’t keep up with their mortgage payments, and the banks struggled as a result. Voila! Blame the Dems!

Fox News’ Neil Cavuto helped get the ball rolling. Media Matters reported that Cavuto conflated giving home mortgages to minorities with risky lending practices, suggesting that there should have been “a clarion call that said, ‘Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster.’ ”

The National Review is on board with a similar line of thinking, blaming the Community Reinvestment Act for much of the crisis: “The CRA empowers the FDIC and other banking regulators to punish those banks which do not lend to the poor and minorities at the level that Obama’s fellow community organizers would like. Among other things, mergers and acquisitions can be blocked if CRA inquisitors are not satisfied that their demands — which are political demands — have been met. There is a name for loans made to people who do not have the credit, assets, income, or down payment to qualify for a normal mortgage: subprime.”

All of this seems rather silly on its face, but thankfully, Matt Yglesias went to the trouble of setting the record straight.

For one thing, the timeline is ludicrous. The Community Reinvestment Act was passed in 1977. Are we supposed to believe that CRA was working smoothly throughout the Carter, Reagan, Bush I, and Clinton years and then only under Bush II did overzealous anti-“redlining” enforcement come into play, perhaps a result of Dubya’s legendarily close relationship with ACORN? Or maybe overzealous enforcement back in the late 1970s is somehow responsible for a real estate blowout that only materialized 30 years later? It doesn’t even come close to making sense.

Beyond that, the mere existence of “subprime” loans — i.e., mortgages given to less-creditworthy individuals at higher interest rates — isn’t the problem here. The problems have to do with what was done with the loans after they were packaged, sold and used to make leveraged plays.

Sorry, conservatives, you’ll have to keep looking for a way to blame Democrats for this mess. Good luck with that.

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