Those who do not learn from the past will be doomed to repeat it.
That’s how the old saying goes, anyway. Not that the saying itself has ever been enough to make wise men out of fools.
History has taught us that fools can be even found even among the wealthy and powerful. Banks, for example.
Under pressure to solve the alleged problem of ‘systematic racism’ that is said to be afflicting the entire nation and every institution therein, they made a point of retracing the very same paths that created one of the more dramatic financial crises in the last 100 years.
JPMorgan Chase said Thursday it will extend billions in loans to Black and Latino homebuyers and small business owners in an expanded effort toward fixing what the bank calls “systemic racism” in the country’s economic system.
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.”
In the immediate aftermath of the police killing of George Floyd, JPMorgan announced a commitment of $1.75 billion toward programs they said would help address racial inequalities. But since then, as protests have remained constant in some urban centers, there has been a push for banks to do more.
…Ed Golding, the executive director of the MIT Golub Center for Finance Policy, said JPMorgan’s investment is impressive but narrowing the gap requires more fundamental changes to the financial system. He noted that there’s a 30% gap between Black and white homeownership, amounting to about 4.5 million households. JPMorgan’s investment would go to a fraction of those.
“We are not going to do it overnight,” said Golding, who served as the head of the Federal Housing Administration under the Obama administration. “I applaud the energy and the direction but it’s going to take massive government policy changes to really move the needle and make up for hundreds of years of systemic racism.”
According to a recent study that Golding co-authored, African Americans on average pay higher mortgage interest payments, insurance premiums and property taxes than white families, adding an average of $67,320 to their homeownership costs. The study said Black families are disadvantaged by a risk-based pricing system, which charges higher mortgage rates for lower down payments and credit scores. Golding called for a system that would pool risk among borrowers.
The Black Lives Matter protests have pushed dozens of companies to announce initiatives and policies to fight racial inequities, from pledges to bring more African Americans into leadership roles, to new investments intended to promote Black owned businesses. –APNews
It is entirely possible all the parties involved mean well.
But they are addressing the wrong problem, and offering a solution that’s already failed once. Spectacularly.
Sowell explains part of it here: Thomas Sowell Talks About Black Lives Matter And How They Are WRONG (VIDEO)
President Clinton’s tenure was characterized by economic prosperity and financial deregulation, which in many ways set the stage for the excesses of recent years. Among his biggest strokes of free-wheeling capitalism was the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act, a cornerstone of Depression-era regulation. He also signed the Commodity Futures Modernization Act, which exempted credit-default swaps from regulation. In 1995 Clinton loosened housing rules by rewriting the Community Reinvestment Act, which put added pressure on banks to lend in low-income neighborhoods. It is the subject of heated political and scholarly debate whether any of these moves are to blame for our troubles, but they certainly played a role in creating a permissive lending environment. — Time
It’s not enough to make borrowing easier. Paying it back needs to be manageable, too.
Trump’s policies on taxes, regulations and jobs have been putting Americans — and minorities in particular — back to work in spectacular fashion, with substantial a real-world rise in wages.
THAT is how you help people become homeowners, that and building a solid base of financial literacy. Helping people acquire debt they cannot hope to repay is no help at all.
Sowell himself pointed out that statistically, interest rates are a direct function of risk factors. If you really want to make the world a better place, address those risk factors. Help with employment (or self-employment), and make sure every American has a solid grounding in financial literacy.
But no. They’d much rather push a woke handout (do you prefer the word ‘bribe’) to a Marxist activist group that could make life for their bank a living hell if they didn’t.