Nine years ago this month, the New York Times proved to be rather prophetic:
Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.
”From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”
[...]
Home ownership has, in fact, exploded among minorities during the economic boom of the 1990’s. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University’s Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.
In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.
This whole mess was inspired by rabble-rousing left-wing groups who felt (not thought) that blacks were not getting enough mortgages.
Note, however, that when whites (31%) or Asians (46%) are on the losing end of this equation, it is apparently NOT evidence of any racism. Right, ACORN?
Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.
– Steven A. Holmes, “Fannie Mae Eases Credit To Aid Mortgage Lending”, New York Times, 30 September, 1999.
Yes, credit ratings are an issue.
But it’s also in part because those mortgages
weren’t
being
paid.
Call me crazy…
Filed under: The Government Engineered Mortgage Crisis , African-Americans, American Enterprise Institute, Government engineered mortgage crisis, Hispanics, mortgages, Peter Wallison, subprime, subprime mortgage collapse
