As a dog returneth to his vomit. . . so a fool returneth to his folly.
Paul Sperry, writing in America’s Newspaper of Record this morning [Re-inflating the bubble, New York Post, Apr. 21, 2013]:
Obama hired back all the Clinton-era officials who caused the housing bust—so they can do it all over again
In the 1990s, convinced that the US mortgage market was racist, the Clinton administration launched a massive campaign of social engineering.
Through government entities Fannie Mae and Freddie Mac, officials encouraged extending mortgages to people with little or no credit. They targeted private banks with discrimination lawsuits if they didn’t lend to enough minorities or people with low incomes. Housing prices skyrocketed as people with no down payment or shaky salaries suddenly were able to buy homes.
Then the bubble burst.
Millions were unable to pay their subprime loans, and they took the banks down with them. The housing market—and the economy—is still recovering from the folly.
Now the Obama administration wants to do it all over again.
The article that follows details how the policy of arm-twisting lenders to give more and easier loans to blacks and Hispanics—the policy that gave us the 2008-9 crisis—is being replayed with the same demented players, including the most demented of them all:
THOMAS PEREZ: Perez served as deputy assistant attorney general in the Clinton Justice Department. Now he heads the department’s civil-rights unit, where he’s investigated no fewer than 60 banks on what the banking industry complains are trumped-up charges of lending discrimination. Perez has likened bank defendants to cross-burning Klansmen and said he’s using them to “repair” and “rebuild” entire “minority communities” hurt by foreclosures.
“We will require lenders to invest in the community they’ve harmed,” Perez promised the leftist National Community Reinvestment Coalition in 2011. Added Perez: “We encourage a more holistic approach to lending that looks beyond merely credit score when determining a borrower’s ability to pay.”
Scores of risky mortgages are already being inked, restarting another cycle of risky financing. Obama is so impressed with Perez’s results, he’s promoting him to his Cabinet. Perez is up for Labor Secretary.
The problem here is that the dementia is near-universal. The evil and poisonous doctrine of Disparate Impact, which has been blessed by the U.S. Supreme Court, tells us that unequal group outcomes must be the result of racism. If rational credit standards lead to unequal group outcomes, it follows that rational credit standards are racist.
The result, as mathematicians say, follows. To banish racism from banking we need “a more holistic approach” to credit, i.e. one less rational.
The problem is, I repeat, universal. This kind of thinking is not restricted to old Clinton-era retreads, or to small cabals of fringe leftists. We are all supposed to believe it. Anyone who doesn't believe it is a Very Bad Person.
In a sane republic under our Constitution, Congress could curb the economy-wrecking activities of Perez and crew by means up to and including impeachment.
To do that, however, some body of congresscritters would have to be willing to go on the record as saying that under rational credit standards, Sun People (blacks and Hispanics) are in aggregate less creditworthy than Ice People (whites and East Asians).
Do we have a volunteer senator or representative willing to go on record as saying that? Anyone? Hello?
I guess not. So: Heads between knees, brace for impact.