Blaming the Victims of the Crisis

The US economy is in the midst of the worst crisis since the Great Depression. In response, segments of the ruling class have sought to deflect working class anger using a despicable and well-worn strategy: blatant racism.

They seek to shift the blame for the current crisis away from those who are actually responsible and onto the victims — the disproportionately African American and Latino low-income borrowers who were scammed into the sub-prime mortgages that are the chief cause of the crisis in the housing market that sparked the broader crisis.

In a recent Washington Post column, Charles Krauthammer, who repeatedly referred to the majority of people as “the mob,” stated that “only a fool or a demagogue” would see predatory lending as a major cause of the financial crisis. Instead, he blamed an imaginary “bipartisan agreement to use government power to expand homeownership to people who had been shut out for economic reasons or, sometimes, because of racial and ethnic discrimination.”

Fox News chimed in with the same argument. As reported on the Media Matters Web site, Fox News’ Neil Cavuto conflated giving home mortgages to minorities with risky lending practices, saying there should have been “a clarion call that said, ‘Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster.’”

Minorities also were targeted by Mark Krikorian, head of the anti-immigration group FAIR. In his blog on the Web site of the right-wing magazine National Review, Krikorian posted Washington Mutual’s final press release before its collapse–titled “WaMu Recognized as Top Diverse Employer — Again.” Krikorian called his post “Cause and Effect?,” implying that the bank’s hiring of minorities is behind its failure. “I really thought this was a joke, but it’s not,” he wrote.

In a National Review article titled “Illegal Loans: A Criminal Business,” Michelle Malkin claimed to show “how illegal immigration, crime-enabling banks and open-borders Bush policies fueled the mortgage crisis,” which she refers to as the “illegal-alien home-loan racket.”

In the article, Malkin jumps from complaining about loans made to undocumented immigrants to pointing out that foreclosure rates are disproportionately high in Latino neighborhoods, which she calls “illegal-alien sanctuaries.”

Republican politicians also got into the act. On September 25, at a House hearing, Rep. Michele Bachmann (R-Minn.) placed blame for the collapse of Fannie Mae and Freddie Mac on Bill Clinton’s supposedly overzealous enforcement of Community Reinvestment Act (CRA) “quotas” that “forced” banks to encourage diversity by lending “on the basis of race.”

This is absurd on its face, since about half of all sub-prime loans were made by mortgage companies that aren’t regulated by the CRA at all.

To his credit, Rep. Keith Ellison (D-Minn.) debunked Bachman’s racist nonsense and placed the blame for the crisis where it belongs: on deregulation, falling wages and predatory lending. He wrote that “research clearly shows that the majority of the predatory loans that have led us to this financial mess were originated by non-bank financial institutions and other entities that did not have a CRA obligation and lacked strong federal regulatory oversight. Shifting the blame for the current economic crisis to laws that allow equal access and opportunity to communities of color is ridiculous.”

These attacks — particularly the absurd idea that “misplaced generosity” on the part of banks supposedly forced to lend to minorities and the poor is to blame for the current crisis — are without foundation. It is an effort to shift the blame from the real culprits: the criminals on Wall Street and their bipartisan cronies in Washington.

African Americans have faced hundreds of years of slavery, Jim Crow racism and institutional racism that persist to this day. And housing was — and remains — a major aspect of this continued racial oppression.

One key element of housing discrimination is redlining, the practice of denying loans in Black neighborhoods. In 1935, the government’s Home Owners’ Loan Corporation, at the behest of the Federal Home Loan Bank Board, labeled African American neighborhoods as “risky.” The result: Blacks were denied loans and forced to pay more for substandard housing.

As Petrino DiLeo points out in the International Socialist Review, legislation like the Community Reinvestment Act of 1977 has had a limited impact. Although the CRA prohibited discrimination based on race or national origin in terms of access to credit, “during the past 30 years, the form of financial racism has shifted from being a question of the denial of credit to one where credit is offered on predatory terms.”

In recent years, African Americans were given sub-prime mortgages at over twice the rate of low-income whites. These loans typically have adjustable interest rates that are now on the rise. As a result, foreclosures are increasing and erasing the savings of Black families, who on average have 63 percent of their net worth in home equity.

African Americans are today disproportionately represented among the one in six homeowners who owe more than their house is worth — and many face skyrocketing mortgage payments to boot.

The banks, not minority or low-income borrowers, are to blame for the sub-prime fiasco. They paid mortgage brokers more for sub-prime loans, encouraging them to hand them out like candy, even to people who qualified for standard mortgages. That’s because the riskier loans yielded returns at higher interest rates, which translated into higher rates of return for investors and fatter commissions for the investment banks.

Thus, while the banks are being bailed out with over $700 billion taken from the pockets of the working class, the victims of predatory sub-prime lenders — disproportionately low-income, African American and Latino workers — are being thrown out of their homes and onto the street.

Gary Lapon is an activist and political cartoonist in Western Massachusetts. He can be reached at: glapon@gmail.com. Read other articles by Gary.

13 comments on this article so far ...

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  1. Gary Lapon said on October 22nd, 2008 at 11:27am #

    The above article was first published by Socialist Worker: http://socialistworker.org/2008/10/21/blaming-victims-of-the-crisis

  2. bozhidar bob balkas said on October 22nd, 2008 at 2:05pm #

    gary, yes the rich always blame the poor people. and for ages.
    we r- to them- lazy, dirty, uneducated, unmotivated, etc.
    we need their guidance/proddings/firm rule else we just get lazier and lazier. thnx

  3. Drew said on October 22nd, 2008 at 2:43pm #

    How ironic. The poor always blame the rich. Think about it.

  4. Timber said on October 22nd, 2008 at 2:46pm #

    Of course they focus on race; if they said “poor neighborhoods” instead of identifying them by who lived there, they’d be admitting to class divisions that they claim don’t exist.

    By the same token, I live in a poor/working-class neighborhood myself; are half of my neighbors driving Escalades, Tahoes, Yukons, Expeditions and other pricey gas-guzzlers because they were “tricked” by some slick sales pitch, or because they judge themselves by the same criteria that the middle class and wealthy do–possessions and status symbols?

  5. Donald Hawkins said on October 22nd, 2008 at 3:29pm #

    The observable universe contains about 3 to 7 × 1022 stars (30 to 70 billion trillion stars),[13] organized in more than 80 billion galaxies, which themselves form clusters and superclusters.[14]

    Estimation based on the measured stellar density
    One way to calculate the mass of the visible matter which makes up the observable universe is to assume a mean solar mass and to multiply that by an estimate of the number of stars in the observable universe. The estimate of the number of stars in the universe is derived from the volume of the observable universe
    and a stellar density calculated from observations by the Hubble Space Telescope

    yielding an estimate of the number of stars in the observable universe of 9 × 1021 stars (9 billion trillion stars).

    Lazy sometimes but not stupid.

  6. Brian Koontz said on October 22nd, 2008 at 8:58pm #

    “gary, yes the rich always blame the poor people. and for ages.
    we r- to them- lazy, dirty, uneducated, unmotivated, etc.
    we need their guidance/proddings/firm rule else we just get lazier and lazier. thnx”

    That’s not exactly true. The rich don’t so much “blame the poor” as want to establish in their own minds the degradation of the poor. It’s part of the ongoing abusive relationship between the rich and the poor – kind of like when an abusive spouse tells his/her mate – “You’re pathetic. You’re nothing”.

    “How ironic. The poor always blame the rich. Think about it.”

    The rich are the ones in control – therefore they deserve the blame when they abuse the world (almost always) and the credit when the help the world (almost never).

  7. Deadbeat said on October 22nd, 2008 at 9:26pm #

    In recent years, African Americans were given sub-prime mortgages at over twice the rate of low-income whites.

    This is an issue of both class and race. That shouldn’t be ignored in the comments. It is not just about the “poor”. The ruling class is engage in their default scapegoating of African American in their attempt to align themselves with working class whites. Let’s recall that it was the “Reagan Democrats” (working class whites) that consistently voted against their interest that gave the U.S. 30 years of reactionary economics policies.

  8. Donald Hawkins said on October 23rd, 2008 at 3:53am #

    and the credit when they help the world. Now would be a very good time to start and soon. It sure looks like the survival of the human race means the system needs to change and being rich that is a big part of the system you know whatever it takes needs to change. Oh no how could we go on to live in such a World. Well keep using this system and see how well it works.

  9. bozhidar bob balkas said on October 23rd, 2008 at 7:32am #

    drew,
    the reason that some poor and even some rich people balme the superrich, is because superrich have iron grip on econo-military-political power.
    thus r responsible for all the crimes US has been commiting for at least a century.
    thnx

  10. brs said on October 23rd, 2008 at 7:53am #

    Drew = republican paid troll. Think about it.

  11. Gary Lapon said on October 23rd, 2008 at 8:44am #

    On the topic of “Reagan Democrats” I’d like to recommend this article:
    http://www.counterpunch.org/taylor10222008.html , “Race and the Election” as well as: http://socialistworker.org/2008/05/09/myth-reactionary-working-class

    To respond to Timber, I doubt you live in a working class neighborhood if half of your neighbors are driving Escalades and the like. (People are going into debt to pay for essentials: http://articles.moneycentral.msn.com/SavingandDebt/ManageDebt/TheWorstKindOfDebtChargingTheGroceries.aspx AND http://www.usatoday.com/money/perfi/credit/2008-02-28-credit-cards_N.htm)

    This does raise an important point: what about working class people who get over their heads in debt, aren’t they to blame at least in part? No. The reality is that every Escalade, every house, every good or service in the world was made by the working class, which creates all of the wealth. The reason so much of this wealth ends up in the pockets of an idle, parasitic ruling class is because of exploitation, of workers being robbed of the value they create. Then the capitalists have the nerve to lend the wealth they steal back to the workers they stole it from! And they can charge predatory interest rates, because the workers, especially those who also face racism, are “risky” borrowers. They are “risky” BECAUSE of exploitation and racism, because their wages are constantly being pushed down (replaced by borrowing) and their jobs are not secure (a result of capitalism’s tendency towards crisis).

    If you take a step back and look at the big picture, workers are not living beyond their means in any absolute sense. Our means are artificially restricted by the fact that we’re exploited by a small group of people who use the wealth we create to send us to war to kill and be killed, waste it on their luxury goods, advertising, making 40 different types of toilet paper and toothpaste, and other nonsense, and produce without regard to the environment or workers’ safety. Let’s keep the focus on who is really to blame.

  12. Drew said on October 23rd, 2008 at 10:21am #

    Paid by Republicans? I wish. I’m neither left nor right. It’s time for class cooperation instead of competition and warfare. If society had a coherent vision and a common culture there would be less class antagonism and more synthesis on all levels. Given the pluralistic basis of modernity I doubt very much that will ever happen, and so the pointless fighting continues.

  13. bozhidar bob balkas said on October 23rd, 2008 at 5:00pm #

    brian,
    i have restricted the blame for poor by rich people to the fact that they look dwn on us; they hate us because we want ‘their hard-earned’ (read dishonestly) money.
    they blame us for, what’s in their mind, our laziness and for their ‘burdens’ looking after us, etcetc.
    they don’t blame us for US war failures. or do they? r they blaming soldiers in iraq and afgh’n for the fact that the ‘missions’ r not completed?
    actually, as i was distributing antiwar leaflets in vancouver in ’03, a woman whom i gave a leaflet said to me that our protest may be helping pashtuns.
    and bush can go after me as well for aiding resistors. didn’t he pass a law that allows US to penalize dissidents for being proterrorist?
    so they may blames for that too. thnx