{"id":61993,"date":"2017-01-30T05:00:21","date_gmt":"2017-01-30T11:00:21","guid":{"rendered":"http:\/\/www.shotinthedark.info\/wp\/?p=61993"},"modified":"2017-01-29T23:04:25","modified_gmt":"2017-01-30T05:04:25","slug":"grrrrr-2","status":"publish","type":"post","link":"http:\/\/www.shotinthedark.info\/wp\/?p=61993","title":{"rendered":"Grrrrr"},"content":{"rendered":"

Joe Doakes from Como Park emails:<\/p>\n

\n

Just before handing over power, the Obama Justice Department sued Klein Bank for redlining<\/span><\/a>. \u00a0Prosecution exhibits at the link include a map of Klein\u2019s service territory, a crescent around the West side of Minneapolis.\u00a0 They don\u2019t lend in the inner cities, that\u2019s not their business model.\u00a0 But those are the highest concentration of people of color! \u00a0Why wouldn\u2019t Klein want to make loans there?\u00a0<\/span><\/p>\n

\u00a0<\/span>Gee, I wonder: why would any prudent lender think race or neighborhood would have anything to do with loan profitability?\u00a0 Have you ever driven through North Minneapolis or Frogtown?\u00a0 Looked at all the foreclosed properties? Why would any sane lender want to lend money there?<\/span><\/p>\n

\u00a0<\/span>Social Justice types insist there\u2019s no difference in foreclosure rates between Black and White neighborhoods, that\u2019s just a racist stereotype.\u00a0 And yet every study by Social Justice types undercuts the narrative supporting the Community Reinvestment Act\u2019s requirement of lending to people who can\u2019t afford to repay.\u00a0 Here are some from the Twin Cities, who see the damage:<\/span><\/p>\n

\u00a0<\/span>http:\/\/isaiahmn.org\/2012\/05\/east-side-of-st-paul-hit-hardest-by-foreclosure-crisis-impact-to-entire-city\/<\/a><\/span><\/p>\n

\u00a0<\/span>http:\/\/www.mn2020.org\/issues-that-matter\/economic-development\/map-of-the-week-submarkets-shape-foreclosure-crisis<\/a><\/span><\/p>\n

\u00a0<\/span>http:\/\/www.irpumn.org\/uls\/resources\/projects\/IRP_mortgage_study_Feb._11th.pdf<\/a><\/span> which contains this especially good paragraph:<\/span><\/p>\n

\u00a0<\/span>\u201cThe enormous costs of foreclosures\u2014to families who lose their homes as well as to cities and towns losing tax resources\u2014have been greatest for communities of color. Both subprime lending rates and foreclosure rates have been highest in neighborhoods with the highest percentages of people of color. The impact of these patterns is especially notable in North Minneapolis, an area where prime lenders are noticeably under-represented and subprime lenders are significantly over-represented.\u201d<\/span><\/p>\n

\u00a0<\/span>Prime lenders are underrepresented?\u00a0 Why would that be?\u00a0 The Community Reinvestment Act demands that banks lend money to persons of color.\u00a0 But that group tends to have worse credit ratings and (at least in some people\u2019s minds) a culture that fails to emphasize adhering to your contracts.\u00a0 So lenders don\u2019t consider them prime candidates for a loan; instead, lenders demand a risk premium in the form of higher interest rates to make those loans, which makes it harder for the borrower to pay the loans when there\u2019s an economic hiccup, which results in massive foreclosures in neighborhoods of color.\u00a0 Not all of them, mind you \u2013 the foreclosure rate in the Asian community is a fraction of that in the Black and Hispanic community \u2013 which gives support to the notion that cultural differences matter.<\/span><\/p>\n

\u00a0<\/span>The Social Justice solution, of course, is not to work with persons of color to raise their credit scores or change their culture.\u00a0 Their solution was to lower the lending criteria for a prime rate loan.\u00a0 That way, everybody would get the cheap rates so nobody would default. \u00a0Except it didn\u2019t work, as a decade of foreclosures and bailouts has amply demonstrated.<\/span><\/p>\n

\u00a0<\/span>The Community Reinvestment Act is unicorn thinking and bad banking practice.\u00a0 It caused the real estate crash that cost an entire generation most of its life savings.\u00a0 The Act should be repealed before it causes another.<\/span><\/p>\n

\u00a0<\/span>Joe Doakes<\/span><\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Joe Doakes from Como Park emails: Just before handing over power, the Obama Justice Department sued Klein Bank for redlining. \u00a0Prosecution exhibits at the link include a map of Klein\u2019s service territory, a crescent around the West side of Minneapolis.\u00a0 They don\u2019t lend in the inner cities, that\u2019s not their business model.\u00a0 But those are […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[57],"tags":[],"class_list":["post-61993","post","type-post","status-publish","format-standard","hentry","category-economy-and-the-market"],"_links":{"self":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts\/61993","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=61993"}],"version-history":[{"count":1,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts\/61993\/revisions"}],"predecessor-version":[{"id":61994,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=\/wp\/v2\/posts\/61993\/revisions\/61994"}],"wp:attachment":[{"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=61993"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=61993"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.shotinthedark.info\/wp\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=61993"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}