via Revolver:
In 2008, disastrous policies by America’s political and financial elite caused the worst financial calamity since the Great Depression. Ever since that crash, the American middle and working classes have been in decline. But the plutocrat class came out of the disaster richer and more powerful than ever. So it’s hardly surprising that right now, they’re laying the groundwork for another housing bubble, and another disastrous crash. And Joe Biden’s presidential campaign is egging it on.
On Thursday, banking giant JPMorgan Chase announced a $30 billion plan to “advance racial equity”:
The New York bank said it is committing $30 billion over the next five years toward programs that include earmarking more money for getting Black and Latino families into homeownership and providing additional financing to build affordable rental housing units.
“Systemic racism is a tragic part of America’s history,” said JPMorgan Chase CEO Jamie Dimon in a statement. “We can do more and do better to break down systems that have propagated racism and widespread economic inequality.” [AP]
Specifically, JPMorgan’s plan is to create thousands of new mortgages based not on creditworthiness but on skin color:
As part of our commitment to promote and expand affordable housing and homeownership for underserved communities, we will take actions to increase equity, affordability and access to housing by:
- Originating 40,000 new home purchase loans for Black and Latinx households through an additional $8 billion commitment in mortgages
- Helping an additional 20,000 Black and Latinx households achieve lower mortgage payments through refinancing loans totaling up to $4 billion
- Financing an additional 100,000 affordable rental units through a $14 billion commitment in new loans, equity investments and other efforts [JPMorgan]
JPMorgan’s new loan pledges are based on the idea that its lending practices have been racist, and that it has so far refused to provide profitable home loans to minority communities for no other reason besides prejudice. Its solution is to lower standards to provide loans it previously would not have, in the name of greater equality.
JPMorgan isn’t just pledging its own money to this foolish cause. In the company’s announcement, it vows to lobby Congress for changes to the law it says will generate another $500 billion in mortgages for those whose credit is currently too poor to obtain one.
It is no exaggeration to say that this is the exact recipe for another calamitous housing crash and economic disaster for all Americans. And we know this because it’s the same strategy used prior to the 2008 housing crash.
For decades, both political parties have sought higher home ownership rates in America. This isn’t a bad thing. People who own their own homes are more invested in their communities, have a stake in society, and have something to be proud of. But home ownership can only be effectively increased by keeping houses affordable, and by providing the wages and economic stability people need to make payments on them.
Instead, JPMorgan is pushing more debt and lower standards for favored races and acting like this magically will not result in a cascade of defaults by borrowers.
Two decades ago, George W. Bush embraced the same disastrous thinking.
In a 2002 speech at St. Paul AME Church in Atlanta, President Bush outlined his plan for increasing minority home ownership in America:
It is stunning how much overlap there is between Bush’s plan and JPMorgan’s. Bush blasted down payments as a “barrier” to buying a home, as though they are an arbitrary obstacle rather than a critical sign of a borrower’s ability to save money and build wealth. Now, 18 years later, JPMorgan is promising a new “down payment and closing cost assistance fund.”
Bush promised a $2.4 billion “affordable housing” initiative; JPMorgan promises $14 billion for the same.
Bush announced a grand push for financial education and “housing counseling;” JPMorgan pledges to “amplify education and counseling programs to prepare more Black and Latinx communities for sustainable homeownership.”
Just like JPMorgan, Bush explicitly racialized his push for greater home ownership. “By the year 2010, we must increase minority home owners by at least 5.5 million,” he said in his 2002 speech. Companies were urged to cut standards to achieve Bush’s mission, and cut standards they did. In one infamous case, a California strawberry picker earning $15,000 a year was handed a $720,000 mortgage. By 2006, almost a quarter of all new mortgages were subprime, higher-interest loans given to individuals who didn’t meet conventional lending standards. Nearly half of all black and Hispanic borrowers assumed subprime mortgages.
I guess the lack of jail time from the last scam taught them a valuable lesson.
@kitt: And Obama making sure the bonuses were still paid. Perhaps the Democrats are planning on a Republican following Harris so they can take the fall (again) for the disaster Democrats created.