How come?
UPDATED: In the comments, Barry writes:
Ritholtz said...Im busy with real stuff . . .
Hmmmhmmmh ... He seemed to have plenty of time before we had our little showdown.
My published articles are archived at iSteve.com -- Steve Sailer
Ritholtz said...Im busy with real stuff . . .
Hmmmhmmmh ... He seemed to have plenty of time before we had our little showdown.
My published articles are archived at iSteve.com -- Steve Sailer
We live in very different worlds.
Mine is data and numbers and statistics and facts. In the investment world, by how well your theories of what is really going translates into an investable theme; you are judged by performance, not rhetoric.
Your world is all soft theory and suppositions and squishy reasoning and hard-to-prove causation. In my world, it would be described as "not actionable in the investment realm."
I am happy to visit, but the commute is a bitch.
My published articles are archived at iSteve.com -- Steve Sailer
I think we are approaching this from two entirely different universes.
I am looking for cause and effect; I want to see data that supports or detracts from the proposition at hand. PROVE TO ME that X caused Y (including actual statistics).
Your proposal of Diversity causing the housing crash reads to me as a soft philosophical argument that is by definition unprovable -- and undisprovable.
At the very least, I see no proof in your writings. They are cogent arguments that leap from A to B to C -- but they lack the rigorous statistical evidence to demonstrate something convincingly to people who insist on hard data.
In my belief system, I use as few assumptions as possible. I try to avoid things that are unquantifiable. Statistical back testing is just on way to do that.
But even softer analyses such as war-gaming and alternative scenarios have to have some reasonable basis for proceeding. It cant be all assumptions, beliefs guesses and hunches.
I’ve run out of patience with tired memes and discredited claims by fools and partisan.
The rhetoric of those pushing nonsense on the public in an attempt to confuse rather than illuminate — the phrase is “agnotology” – only serves to aid the lobbyists working on behalf of the Banks and Investment houses to maintain the status quo. ..
The nonsense rhetoric blogged about has no cost to those pushing these discredited memes ...
The historian does not isolate causes, which defy sorting out even in the natural world; he describes conditions that he judges relevant, adding occasionally an estimate of their relative strength.
My published articles are archived at iSteve.com -- Steve Sailer
Ritholtz said...Dear Mr. Ritholtz:My bad -- I guess I am not clearly defining what I mean by "Data".
Allow me to present an example:
The Federal Reserve Board data shows that:
* More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions. These firms are not covered by the CRA
* Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
* Only one of the top 25 subprime lenders in 2006 was directly subject to the CRA.
Sources:
http://www.federalreserve.gov/pubs/bulletin/2007/articles/hmda/default.htm
and
http://www.fdic.gov/news/news/financial/1999/FIL9920a.html
amongst others
This is what I mean by data, from reputable sources, relating to the actual issue at hand.
My apologies for any prior confusion...
I would certainly debate him on the topic "Diversity was a major factor in the mortgage meltdown."
The causes are much bigger than the Community Redevelopment Act. I've always argued that George W. Bush's drive to add 5.5 million minority homeowners, as enunciated at the October 15, 2002 White House Conference on Increasing Minority Homeownership, by abolishing down payment requirements and by allowing "low doc" mortages (a.k.a., liar loans) was more directly responsible. But they are obviously both part of the same overall Diversity mindset.
"Pressuring nonbank lenders to make more loans to poor minorities didn’t stop … If it didn’t happen, Clinton officials warned, they’d seek to extend [Community Reinvestment Act] regulations to all mortgage makers. … To rebuff the criticism, the Mortgage Bankers Association (MBA) shocked the financial world by signing a 1994 agreement with the Department of Housing and Urban Development (HUD), pledging to increase lending to minorities and join in new efforts to rewrite lending standards. The first MBA member to sign up: Countrywide Financial, the mortgage firm that would be at the core of the subprime meltdown."
My published articles are archived at iSteve.com -- Steve Sailer
Ritholtz said...How about some evidence, hard data, facts?
Or are you more comfortable with nudges, hunches and squishy junk.
Show me some hard evidence!
A trillion here, a trillion there, pretty soon we're talking about real money
I'm sure the private financial markets were quite capable of blowing up a big bubble by themselves in the eternal see-saw struggle between greed and fear, but this political pressure for lending to minorities with doubtful credit must have exacerbated the problem. About half of all mortgages for blacks and Hispanics are subprime, versus about one-sixth for whites.
A reader has sent me some links to articles from 5 to 9 years ago to show me I'm not hallucinating about what I remember. The first are from early in this decade about Fannie Mae's big plans for boosting mortgages for minorities. Now, I don't pretend to understand what Fannie Mae is (but does anybody?). It's some kind of quasi-governmental publicly-traded for-profit thinga-ma-bob, but Fannie Mae's past pronouncements do make interesting reading at present.
Straightforward tax-and-spend programs were out of favor in the 1990s, but lean-on-lenders for the benefit of your political constituents is always in season...
Uncovering the roots of the disastrous home mortgage bubble that popped last year will keep economic historians busy for decades. Yet, one factor has so far been largely overlooked: the bipartisan social engineering crusade to drive up the rate of homeownership by handing out more mortgages to minorities.
More than a negligible amount of the blame for the mortgage meltdown can be traced back to multiculturalism: government-mandated affirmative-action lending, demographic change, illegal immigration, and the mind-numbing effects of political correctness.
The chickens have finally come home to roost...
... some of the conservative talking heads tended to put forward naïve, self-serving, or unpersuasive versions of this theory—such as that the banking crash wasn't the fault of greed in the financial industry, it was the result of the Democrats in Congress passing the anti-redlining Community Reinvestment Act in 1977.Then, "Tino" introduced me to the key source for numbers, the Federal Home Mortgage Disclosure Act database. The federal government carefully tracks how much minorities are getting in mortgage dollars (but not, of course, whether they are paying them back). I blogged on October 10, 2008:The reality is that blame is very widely shared: among Democrats and Republicans, businesspeople and politicians, Congress and the Executive Branch, borrowers and lenders, and whites, blacks and Hispanics.
There's one man, however, who has so far escaped any blame. Few have realized something that turns out to have been staring us in the face all along: that the mortgage mess was, in sizable measure, an outgrowth of the primary political goal of the Bush Administration.
That man's name is Karl Rove.
And the primary political goal of President George W. Bush's political strategist: to bring Hispanics into the Republican Party.
As you'll recall, Rove's best-known tactic to appeal to Latino voters was repeatedly pushing "comprehensive immigration reform" (i.e., an amnesty for illegal immigrants).Rove, though, had other arrows in his quiver. One was a plan to turn Hispanics into Republicans by providing them with loose credit so they could become homeowners...
Tino has added up all the subprime mortgage dollars for the entire disastrous 2004-2007 period. Among borrowers whose ethnicity is unambiguous, he comes up with $900 billion subprime dollars going to non-Hispanic whites, $887 billion to minorities. So, that's 50% of subprime dollars during the worst years of the Bubble went to minorities.
Someday, we'll get a count of defaulted dollars by race.
So, in Massachusetts, the Non-Asian Minority foreclosure rate on subprime mortgages was about twice the white rate. That didn't change too much over the years, but the proportion of mortgages that were subprime and the proportion of mortgage dollars going to minorities changed radically in the Bush years, contributing sizably to the disastrous mortgage meltdown that began in 2007 and triggered the more general crash of 2008.
If that two to one minority to white foreclosure ratio seen in Massachusetts holds true nationally, where minorities took out half the subprime dollars, then minorities would account for two-thirds of all defaulted subprime dollars.
However, Asians probably have a lower default rate. On the other hand, they largely stayed away from subprime mortgages, so it's not a big issue. So, it's likely that minorities accounted for at least 60% of the subprime dollars defaulted.
I’ve run out of patience with tired memes and discredited claims by fools and partisan.
The rhetoric of those pushing nonsense on the public in an attempt to confuse rather than illuminate — the phrase is “agnotology” – only serves to aid the lobbyists working on behalf of the Banks and Investment houses to maintain the status quo.
All is well, nothing to see here, move along.
Well, its time to put up or shut up: I hereby challenge any of those who believe the CRA [Community Reinvestment Act] is at prime fault in the housing boom and collapse, and economic morass we are in to a debate. The question for debate: “Is the CRA significantly to blame for the credit crisis?”
A mutually agreed upon time and place, outcome determined by a fair jury, for any dollar amount between $10,000 up to $100,000 dollars (i.e., for more than just bragging rights).
The nonsense rhetoric blogged about has no cost to those pushing these discredited memes — but interferes in the societal attempts to understand how these problems arose and then how to fix them. Perhaps this will help clarify the issue by forcing those with partisan agendas to stand behind their claims.
Which of the many “CRA was a major factor” proponents have the courage of their conviction to step forward?
I would certainly debate him on the topic "Diversity was a major factor in the mortgage meltdown."
The causes are much bigger than the Community Redevelopment Act. I've always argued that George W. Bush's drive to add 5.5 million minority homeowners, as enunciated at the October 15, 2002 White House Conference on Increasing Minority Homeownership, by abolishing down payment requirements and by allowing "low doc" mortages (a.k.a., liar loans) was more directly responsible. But they are obviously both part of the same overall Diversity mindset.
Heck, I'd debate him for free.
Right here, Barry.
This is representative of the quality of public debate over what caused the mortgage meltdown. In public, there are only two sides: the liberal (Corporate Greed!) and the libertarian (Government Interference!).Yet another example of how the sub-prime market was a creature of the profit motive, and not government mandates.
There is this fascinating little anecdote in Connie Bruck’s Angelo’s Ashes — about Angelo Mozilo’s experiences in Florida as a dark skinned NY Italian, and how that impacted his later venture into minority lending (early 90s) amnd subprime lending (middle 90s):
“The new company [Countrywide] sent Mozilo first to Virginia Beach and then to Orlando. He had never lived outside the Bronx, and years later he told friends that it had been difficult to be a darkskinned Italian-American in these communities. In Virginia Beach, the local club where businesspeople congregated refused to admit him, and in Orlando he had trouble selling mortgages until he met a group of Jewish homebuilders who couldn’t get financing. As his sister, Lori, told me, “Angelo said, ‘Nobody wants to work with you. Nobody wants to work with me. Let’s do it together.’
He was always this Italian guy people didn’t want to accept.” She went on, “When he tans he gets really dark. My mother told me that when he worked in Florida he was asked to sit in the back of the bus.”
And just what might have this done to Angelo’s world view later on? Alex, I’ll take pop psychology for $100:
Despite Mozilo’s ideals, Countrywide did not have a strong record of lending to minorities. In 1992, shortly after Mozilo became chairman of the Mortgage Bankers Association, the Federal Reserve Bank of Boston issued a report stating that it had found systemic discrimination by mortgage lenders against African-American and Hispanic borrowers. Robert Gnaizda, former general counsel of the Greenlining Institute, a nonprofit organization focussed on minority rights, sent the report to Mozilo and other mortgage bankers. “I received a harsh response from Mozilo,” Gnaizda told me.
Privately, however, Mozilo was appalled. He ordered that all Countrywide’s records on rejected minority applicants be sent to him, and he retroactively approved about half of them. Then he dispatched African-Americans, posing as prospective borrowers—he called them “mystery shoppers”—to Countrywide branches, and concluded that they were indeed treated differently from white borrowers.
Countrywide opened new offices in inner-city areas, created counselling centers, and loosened some lending standards, to include borrowers with less than pristine credit histories. Between 1993 and 1994, the company’s loans to African-American borrowers rose three hundred and twenty-five per cent, and to Hispanics they increased a hundred and sixty-three per cent. In 1994, Countrywide became the first mortgage lender to sign a fair-lending agreement with the Department of Housing and Urban Development.
“Countrywide went from close to the bottom in lending to minorities to near the top,” Gnaizda said. “I remember Mozilo telling me, ‘I don’t want to narrow the gap in lending to minorities, I want to end it.’ ”
Eventually, subprime loans became too attractive a business for Countrywide to resist. In September, 1996, it created a new subsidiary for these loans, called Full Spectrum Lending; if the loans performed poorly, the Countrywide brand would not be tarnished. “It was a careful entry, considered closely by those at the top of the company,” a former high-level Countrywide executive recalled. “We sat together and asked each other, ‘Would you make this loan with your money?’ ”
To offset the credit risk posed by subprime lending, the company required borrowers to make a substantial equity investment, ranging from fifteen to thirty-five per cent. . .”
It was the Private sector that saw a profit opportunity and went for it. They made the loans. The government’s role was to provide rhetoric . . .
My published articles are archived at iSteve.com -- Steve Sailer
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