Crime & Federalism

As might be expected, minorities are being blamed for the market crash.  If banks hadn't loaned money to blacks, we'd all be fine.  This is a myth.  At least in 1999, minorities only received 18% of all subprime loans.  Which means you can thank whites for this mess.  (Though the racists won't.)

There is, however, a race angle. 

Republicans wanted to reform Fannie and Freddie.  The Congressional Black Caucus, as well as other Democrats, resisted this effort.  They claimed that without subprime lending, fewer blacks would get home loans.  That was true:

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

So while we cannot blame black homeowners for this crisis, Democrats used racially-motivated reasons to support Fannie Mae and Freddie Mac.  They argued that without subprime lending, blacks would not own homes.  It's a good thing, they said, for blacks to own homes.  (And who can argue, in principle, with that?)  Yet, in protecting blacks, Democrats enabled low-credit white borrowers (the super-majority of subprime borrowers) as well.

The market meltdown demonstrates why the road to Hell is often paved with good intentions.