Racism As Reflex at a Time of Crisis

Bill Quigley

01 Oct 2008

Racism As Reflex at a Time of Crisis

by
Tim Wise

This article originally appeared on Tim Wise blog.

"The idea that loans to the poor or to moderate income
folks could create this mess is almost inherently absurd."

If hypocrisy were currency, conservatives would be able to
single-handedly bail out the nation's free-falling financial system in less
than a week, without the rest of us having to front so much as a penny.

So on the
one hand, folks like this always tell others--especially the poor and people of
color--to take "personal responsibility" for their lives, and not to
blame outside factors (like racism, or the economic system) for their problems.
But on the other hand, these same persons then demonstrate that their own
ability to blame others for their personal setbacks, or the nation's problems,
knows no rival.

So, for
instance, if they or someone they know didn't get the job they wanted, it must
be because of affirmative action or because the job was "taken" by an
illegal immigrant; if their child didn't get into the college of his or her
choice it must be because of some preference given to a black kid; if they
can't afford to send their child to college it's because all the scholarship
money was given to students of color; if their local schools are falling apart
it's because of integration or multiculturalism; if their taxes are too high
it's because of all those government programs for "those people." On
and on it goes, with never so much as a nod to personal responsibility.
Whatever goes wrong in the lives of white conservatives is almost always the
fault of black and brown liberals, or so the story goes.

The right
is so predictable when it comes to this kind of thing, that you can almost set
your watch by their daily eruptions of stupidity.

And so in
the past several weeks, we have been treated to three fresh examples of
conservative scapegoating and buck-passing, in which they seek to blame the
poor or folks of color for various social problems for which the latter are not
the least bit responsible.

First, we have Neil Cavuto of Fox News, followed by Rush
Limbaugh a few days later, along with smaller-market talk radio hosts and
commentators, insisting that the nation's current financial mess is not the
fault of greedy investors, free-wheeling bankers, speculators and other
assorted rich people taking advantage of a largely deregulated market for bogus
investments. Rather, it is the fault of poor people and those who seek to serve
their communities, and especially folks of color, and those who insist on such
things as civil rights.

"Whatever goes wrong in the lives of white conservatives
is almost always the fault of black and brown liberals, or so the story goes."

How so?
Simple: according to these blowhards, laws like the 1977 Community Reinvestment
Act, which seeks to steer investments to economically marginalized communities
so as to stimulate economic development and reverse the longstanding process of
racial and economic
redlining, is the real culprit. If banks hadn't been forced to throw good money
after bad, and make loans to "minorities and risky folks" as Cavuto
said on September 18th, none of this would have happened.

Of course,
none of the reactionary cranks making this argument has seen fit to present
even a single, solitary piece of statistical evidence to support their
scapegoating of CRA. Evidence doesn't matter. Simply saying it, simply
insisting that it's the black and the brown and the poor who are to blame is
supposed to be enough. Sadly, for lots of Americans it will be. The kind of
people who listen to the Limbaughs of the world, after all, rarely care much
for facts. But for those who still put a premium on truth, and who place more
value on honesty than their own need to nurture their anger, here are a few
things to keep in mind.

First, the
Community Reinvestment Act only applies to banks and thrifts that are
federally-insured. This means that the independent mortgage brokers, who are
responsible for half of all the nation's sub-prime lending--and who have been
writing such loans at more than twice the rate of banks and thrifts--aren't
even covered by the law. And make no mistake, it was the hand of the mortgage
broker, more than any other, that precipitated the housing bubble. These are
folks who were writing "stated income" loans (which means you don't
have to prove your income, you can just tell them a number and get the OK), not
caring about whether the borrower might default, since they were going to turn
around and dump the loan at a profit, onto the secondary market, by pawning it
off to investors who were gobbling up debt, betting on the further expansion of
home values. In this scenario, neither the original broker nor the investor who
bought up the debt was concerned about what would happen to the borrower who
took out the initial loan. After all, if a borrower defaulted, but the housing
market was still going up in value, they could swoop in, foreclose and sell the
house again at a profit.

On neither end of this equation were poor people to blame.
The persons getting stated income loans were overwhelmingly middle class,
perhaps hoping to keep up with the richer folks down the block, but certainly
not the poor. Most poor folks are still renters, or just hoping to get a modest
home. And let it suffice to say that none of the vultures snapping up the
mortgage debt on the secondary market were poor, and very few were persons of
color. These were affluent white people, willing to gamble on the potential
misfortune of others.

"The
kind of people who listen to the Limbaughs of the world rarely care much for
facts."

Secondly,
the idea that loans to the poor or to moderate income folks could create this
mess is almost inherently absurd. Fact is, the risk involved with loans to such
persons is quite low. The amount of money lost, even when a low income family
does default, is quite minimal. On the other hand, when a middle class family,
striving to live above their means, takes out a note that eats up half of their
income, the amount lost when the bubble bursts is quite a bit more substantial.
This is one of the reasons that, according again to the evidence, loans to
those with more moderate incomes are actually less risky than those to the
affluent. Looking at CRA-related loans, for instance, the fact is, these
represent nearly one-fourth of all loans written, but less than 10 percent of
the high-cost, high-risk loans that precipitated the current crisis. These
loans actually have lower default and foreclosure rates than non-CRA connected
loans, and are twice as likely to be retained in the portfolios of the banks
that originated them than other loans. In other words, it is not CRA loans
being dumped into the hands of greedy speculators, and then falling flat,
taking the economy with them.

Finally, to
the extent low-income folks of color are shuttled into the sub-prime market,
and then unable to pay their house notes, this unhappy fact owes more to discrimination
than anti-discrimination efforts such as CRA. As several studies have shown,
banks often reject borrowers of color, even when they have credit records
similar to whites with the same incomes. Then, these rejected applicants are
steered towards sub-prime lenders which charge far higher interest and place
the borrowers in great jeopardy by driving up the amount they must repay.

A few years back, a study of Citigroup (which includes
Citi, the group's sub-prime lender), found that Citi in North Carolina was
charging higher interest even to borrowers who could have qualified for regular
loans. In the process, over 90,000 mostly black borrowers were roped into
predatory loans, and as a result paid an average of $327 more per month for
mortgages than those getting loans from a prime lender. This added up to over
$110,000 in excess payments over the life of the loans, on average. In other
words, folks of color who could have qualified for lower-interest loans (that
they would have been able to pay back far more easily) were steered to
higher-cost instruments by greedy financial institutions, looking to make a
quick buck at their expense. That's not the fault of civil rights protection,
it's the fault of economic civil rights violations.

"Louisiana state lawmaker John LaBruzzo proposes solving
the problem of poverty by giving financial incentives to poor women on public
assistance to be sterilized."

As if
blaming the global financial squeeze on the poor wasn't putrid enough, along
comes the National Review Online, which descended even deeper into the pit of
obvious racism on September 26th. To wit, the blog entry entitled "Cause
and Effect?" by Mark Krikorian, executive director of an anti-immigration
group in DC, in which he notes failed S&L Washington Mutual's stellar
record on corporate diversity, as if this were somehow connected to their
insolvency. The fact that WaMu had been ranked as one of the top ten businesses
in the Hispanic Business Diversity Elite, and had received a perfect score on
the Human Rights Campaign's Corporate Equity Index (which focuses on equity for
lesbian and gay folks), are, in Krikorian's mind, linked to their financial
troubles. Because, ya know, if you have too many Latinos and gays working for
you, well, clearly you can't care anything about the bottom line. That
Krikorian presents no evidence, or even logic, to suggest a linkage between
workplace equity and financial incompetence doesn't matter: his readers,
predisposed to scapegoat the non-white and non-straight for anything and
everything, can be expected to take the bait.

And then
there's Louisiana state lawmaker, John LaBruzzo, who proposes solving the
problem of poverty by giving financial incentives to poor women on public
assistance to be sterilized, so as to cut down on their birthrates. LaBruzzo,
whose legislative district was once represented by neo-nazi David Duke (who
also proposed something like this in 1991), insists his plan isn't racist,
sexist, or classist, but merely aimed at cutting down on excessive welfare
costs. He also claims that his plan would reverse the current pattern, whereby
poor women are encouraged to have more babies so as to collect more welfare.

Putting aside the inherently Hitlerian, eugenic rationale
for such actions, LaBruzzo, as with Duke, and most right-wingers, ignores every
bit of logic and evidence so as to push this kind of nonsense. First off, he
ignores the now-twelve-year-old welfare reform law, which prevents additional
payments for persons on welfare who have additional children. Although these
"extra" monies were never very much (in Louisiana they amounted to
less than $100 per month at the time the law was changed), now they are
essentially non-existent. Secondly, LaBruzzo ignores the evidence from more
than twenty years of research, which indicates that persons receiving public
assistance do not, in fact, have more children, on average, than non-welfare
receiving families. So the idea that poor women need incentives not to have
babies is nonsense. What they need is decent-paying jobs, something LaBruzzo
has no idea how to create.

"LaBruzzo is content--as conservatives almost always
are--to blame the poor for their condition."

And
finally, the underlying premise of LaBruzzo's plan--which, if the public
comments posted to Nola.com (New Orleans' main media website) are any
indication, is quite popular--is entirely bogus. Contrary to conventional
wisdom (or at least, contrary to what a lot of white people think, whether wise
or not), the numbers of people even receiving cash welfare in Louisiana are
ridiculously small. LaBruzzo, who said the idea for this bill came to him after
seeing folks in New Orleans during Katrina who were dependent on so-called
government handouts, apparently doesn't feel the need to do any homework. For
had he done so, he would have discovered that at the time of the flooding,
there were fewer than 5000 households in the entire city receiving cash
assistance, out of nearly 200,000 households in all. Fewer than four percent of
black households, and only about one in ten poor households were receiving the
kind of welfare that LaBruzzo would seek to tie to sterilization. Since
Katrina, the number of persons on state aid have fallen even further, as the
poor muddle through with very little assistance of any kind. But rather than
push for rental assistance for low-income folks, which would improve the lives
of poor folks and their communities dramatically, LaBruzzo is content--as
conservatives almost always are--to blame the poor for their condition and seek
to change their behavior (or in this case, compel their infertility) so as to
solve the problem of economic deprivation. How very typical.

So there
you have it: white conservatives who simply cannot bring themselves to blame
rich white people for anything, and who consistently fall back into old
patterns, blaming the poor for poverty, black and brown folks for racism,
anybody but themselves and those like them. That anyone takes them seriously
anymore when they prattle on about "personal responsibility" is a
stunning testament to how racism and classism continue to pay dividends in a
nation whose soil has been fertilized with these twin poisons for generations.
Unless the rest of us insist that the truth be told--and unless we tell it
ourselves, by bombarding the folks who send us their hateful e-mails with our
own correctives, thereby putting them on notice that we won't be silent (and
that they cannot rely on our complicity any longer)--it is doubtful that much
will change.

Tim Wise is the author of: White
Like Me: Reflections on Race from a Privileged Son (Soft Skull Press,
2005), and Affirmative
Action: Racial Preference in Black and White (Routledge: 2005). He can be
reached at: [email protected]

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