Over the weekend, the Washington Post provided some more details about the ongoing foreclosure fraud scandal, noting that “virtually everyone involved – loan servicers, law firms, document processing companies and others – made more money as they evicted more borrowers from their homes, creating a system that was vulnerable to error and difficult for homeowners to challenge.” Many borrowers have been left in limbo as the banks sort out how extensive their problems are.
A bevy of Democratic lawmakers have called for examinations of the banks’ potentially fraudulent activities, while the Attorneys General of all fifty states have pledged a coordinated investigation. Republicans, however, have been largely silent on the issue.
And according to Rep. Darrel Issa (R-CA), who is slated to take over the House Committee on Government and Oversight should the Republicans take the House, the GOP is not really interested in the banks’ malpractice. Instead, Issa wants to “launch aggressive inquiries” into whether the government helped poor people buy houses they couldn’t afford:
The conservative Republican from California, who would become chairman of the powerful House oversight and government reform committee, said hearings would focus on whether the federal government should be involved at all in sponsoring home loans for the poor.
In fact, it’s been a favorite conservative tactic to blame the economic meltdown on the Community Reinvestment Act and other government efforts to spur affordable homeownership and undo some of the inequities in housing finance. This is a convenient way to deflect attention from the malfeasance of Wall Street (which is contributing heavily to Republicans in this election cycle) and to try and blame the country’s economic woes on the government, instead of a deregulatory ideology that allowed financial behemoths to run wild.
But the statistics just don’t support the GOP’s story. The CRA was around for decades before 2008′s troubles, and CRA-covered institutions and loans have performed better than their non-CRA counterparts.
While the GOP likes to blame homeowners for our economic troubles, in the last decade, as the Center for American Progress has documented, banks were still systematically charging minorities higher costs for loans and pushing them into expensive subprime mortgages, even when they could afford standard prime loans, making government policies to ensure fair access to credit a necessary step. It says a lot about the Republican mindset that banks evicting homeowners who aren’t in foreclosure doesn’t merit an investigation, but a low-income family receiving a mortgage in a traditionally under-served community does.