Bloomberg Said Ending Discriminatory Housing Practices Caused Financial Crisis
In a newly surfaced video, Democratic presidential candidate Mike Bloomberg places the blame for the 2008 mortgage and financial crisis on the elimination of a racist lending policy known as “redlining.”
During the 2008 housing and economic collapse, then New York City Mayor Bloomberg said the meltdown was triggered when banks were pressured to “make loans to everyone.” Redlining was the practice where banks drew boundaries around neighborhoods occupied by people of color and refused to offer them mortgages, effectively denying them the ability to own their own home.
“How did we get here, what are the root causes of the mortgage crisis?” Georgetown University President John DeGioia asks Bloomberg during a 2008 forum in the video surfaced by the AP.
Bloomberg answered, “It all started back when there was a lot of pressure on banks to make loans to everyone.” He added, “Redlining, if you remember, was the term where banks took whole neighborhoods and said, ‘People in these neighborhoods are poor, they’re not going to be able to pay off their mortgages, tell your salesmen don’t go into those areas.’”
Bloomberg continued, “And then Congress got involved — local elected officials, as well, and said, ‘Oh that’s not fair, these people should be able to get credit.’ And once you started pushing in that direction, banks started making more and more loans where the credit of the person buying the house wasn’t as good as you would like.”
Bloomberg’s answer is wrong on at least three counts. He is wrong to blame the victims of the financial crisis for predatory lending by banks and mortgage companies. He’s wrong that redlining was done around “poor” neighborhoods when it actually focused on race. Richard Rothstein, the author of The Color of Law, said in an NPR interview, “Anywhere where African-Americans lived nearby were colored red to indicate to appraisers that these neighborhoods were too risky to insure mortgages.” And, Bloomberg is wrong in saying that redlining has truly ended. In cities such as St. Louis and Jacksonville, the ramifications of redlining are still present today, and homeownership rates among communities of color are at the same rate they were before the passage of the 1968 Fair Housing Act.
Instead, discriminatory housing practices and segregation actually set the stage for the financial crisis because African Americans were disproportionately targeted with subprime mortgages. As Ta-Nehisi Coates wrote in his seminal piece on redlining in the Atlantic, “When subprime lenders went looking for prey, they found black people waiting like ducks in a pen.”
Democratic candidate Sen. Elizabeth Warren (D-Mass.) made a similar point in a 2015 speech to the Edward M. Kennedy Institute for the U.S. Senate. She said, “Recently, several big banks and other mortgage lenders paid out hundreds of millions of dollars in fines, admitting that they illegally steered black and Latino borrowers into more expensive mortgages than white borrowers who had the same credit… And it’s still happening.”
Warren also reacted to this newly-surfaced video of her rival for the Democratic presidential nomination seemingly defending redlining. In a tweet, she wrote, “I’m surprised that someone running for the Democratic nomination thinks the economy would be better off if we just let banks be more overtly racist. We need to confront the shameful legacy of discrimination, not lie about it like Mike Bloomberg has done.”
In response to a request for comment, Bloomberg spokesperson Stu Loeser said, “Mike wasn’t in any way supporting redlining and in fact fought hard against predatory lending as mayor and helped other cities find ways to keep people in their homes as a philanthropist. As a candidate for president, he has detailed plans for how he will help a million more Black families buy a house, and counteract the effects of redlining and the subprime mortgage crisis. His plan will provide down-payment assistance, get millions recognized by credit scoring companies, enforce fair lending laws, reduce foreclosures and evictions, and increase the supply of affordable housing.”
Bloomberg’s resurfaced remarks on redlining follow the release of comments he made in 2015 in defense of his “stop-and-frisk” policy of policing minority communities. The former Republican mayor of New York is attempting to repackage himself as someone progressive enough to be the standard-bearer for the 2020 Democratic party, but there are parts of his record — and the rhetoric he used to defend it — that make that, at times, an awkward fit.
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