Almost two years ago, a new Democrat administration and congress took control of Washington.
They immediately sent out invitations to the American people.
“You are cordially invited onto the government plantation. P.S. We’re in charge but you pick up the tab. RSVP by November 2, 2010.”
The RSVP’s have poured in and the majority of Americans have replied “Sorry, we’ve got other plans.”
But it was mostly white voters who turned down this invitation.
Why are blacks, who know life on the government plantation better than whites, and who are proportionately being hit much harder in this difficult economy, still buying what working class whites have rejected hands down? That, as Karl Rove put it, “…we can spend our way to prosperity?”
The problem is broader and deeper. Blacks still by and large see government dependence as the remedy rather than the disease, despite overwhelming evidence to the contrary. They still choose to listen to left wing black political leadership and media who have careers in keeping it all going.
Consider that it was welfare state government policies that caused this economic collapse to begin with. And that it was community activist groups claiming to represent the interests of minorities who lobbied for these policies.
According to a new study by American Enterprise Institute scholar Edward Pinto, a former Executive Vice President and Chief Credit Officer at Fannie Mae, this is exactly what happened.
The recession was caused, according to Pinto, by the collapse of housing and mortgage markets. Markets imploded because of the proliferation of risky unconventional mortgages which spread as result of government dictates to promote “affordable housing.”
It was community activist groups such as National People’s Action and ACORN – yes the old stomping buddies of our president – that lobbied for taxpayer backed lending behemoths, Fannie Mae and Freddie Mac, to relax lending standards.
The result was new law passed in 1992 directing new “affordable housing mandates” on Freddie and Fannie.
Following this, as Pinto tells the story, HUD, the Department of Housing and Urban Development, issued new liberalized lending guidelines, directing that “Lending institutions, secondary market investors, mortgage insurers…..should work collaboratively to reduce homebuyer downpayment requirements.”
A widespread change in the mortgage lending landscape followed.
Whereas in 1990 a tiny fraction of mortgages had downpayments less than 3%, by 2006 “an estimated 30% of all homebuyers put no money down.”