No Such Thing As An Opinion!

July 10, 2011

New report vindicates me: It's true. Black-friendly lending policies actually harmed them!

On November 4, 2010, my sister site published the following article of mine (it has since been published in the Who Would Have Thunk It? section of the current site): 

"Black-friendly money lending policies actually HARMED them! Who would have thunk it?"

My article made the following claims:

1)  "During the late 1990s and early 2000s, the administrations of Presidents Clinton and Bush promoted lending policies with the explicit intent to provide more mortgages to blacks, in order to raise their rate of home ownership.

Who would have thought that during 2010, the government policies would not only
fail to raise the rate of home ownership among blacks but they would actually result in a decrease in home ownership among blacks, and an increase in blacks' financial hardship!

How do I know this was likely the case? Well, I don't even need to see all of the stats. It's just common sense."

Now, fast forward to today:

On July 10, MSNBC

"Black homeownership hit an all-time high in 2004, with 50 percent of African-Americans owning their homes, according to census data. 

Today, the black homeownership rate is 45 percent, compared with 74 percent for whites."

2)  My article claimed:

"And even worse: because blacks and hispanics have lower income and assets, they are less likely to be able to weather the decrease in equity that occurred after the crash.  As a result, they were more likely than whites to foreclose on their homes."

Again, fast forward to today's report:

"Nearly 8 percent of African-Americans who bought homes from 2005-2008 have lost them to foreclosure, compared with 4.5 percent of whites, according to an estimate by the Center for Responsible Lending."

3)  My article also stated:

"Blacks and hispanics likely bought houses at higher prices than whites and asians did. Therefore, when the crash occurred, their homes likely lost more value than the homes of whites. I'd wager that an analysis of the data would bear this out."

"And even worse, because blacks and hispanics have fewer assets, they were disproportionately less likely to be able to capitalize on the lower home prices by buying foreclosed and depressed properties.

(An interesting side note, however, is this: whites and asians may have suffered
more than blacks from the cratering stock market, as whites and asians likely had disproportionately greater holdings before the crash occurred.  But the greater financial resources of whites and asians would mean they were better able to capitalize on the lower prices after the stock market crash occurred)."

Fast forward to today's report:

"Economists say the Great Recession lasted from 2007 to 2009. In 2004, the median net worth of white households was $134,280, compared with $13,450 for black households, according to an analysis of Federal Reserve data by the Economic Policy Institute. By 2009, the median net worth for white households had fallen 24 percent to $97,860; the median black net worth had fallen 83 percent to $2,170, according to the EPI."


Once again, the
74th smartest person in the world has figured it out before others have.  And I did it with pure logic; no research required.  My site aims to show that logic, and not research, is often all one needs to be able to make valid predictions!

For more on the topic, here are more quotes from the MSNBC article.  Although my article didn't specifically address all of the following topics, the points being made are
consistent with the points I made in my article:

"But for Goldring and many others in the black community, where unemployment is still rising, job loss has knocked them out of the middle class and back into poverty. Some even see a historic reversal of hard-won economic gains that took black people decades to achieve."

"Since the end of the recession, the overall unemployment rate has fallen from 9.4 to 9.1 percent, while the black unemployment rate has risen from 14.7 to 16.2 percent, according to the Department of Labor."

"Last April, black male unemployment hit the highest rate since the government began keeping track in 1972. Only 56.9 percent of black men over age 20 were working, compared with 68.1 percent of white men."

"Some economists say the real black unemployment rate is as high as 25 or 30 percent, because government figures don't count 'discouraged' workers who have stopped looking for jobs and dropped out of the labor force."

"College-educated blacks fared worse than their white counterparts in the recession. In 2007, unemployment for college-educated whites was 1.8 percent; for college-educated blacks it was 2.7 percent. Now, the college-educated unemployment rate is 3.9 percent for whites and 7 percent for blacks."

"'It's definitely harder for black people to get jobs,' Wilder says. 'With the economy as bad as it is, people are hiring nephews and family friends and friends of friends. It's hard for black people to break that cycle. We don't own or even run the big companies.'"

"'History is going to say that the black middle class was decimated' over the past few years, Wiley says. 'But we're not done writing history.'"

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