September 26, 2008

Request

Something I've noticed over and over is that the NYC-DC based punditocracy doesn't really believe that there are 47 million Hispanics in the U.S. (Hey, you never meet any at the dinner parties we attend ...) Black people, yes, they see them on TV singing or carrying the football, they're always seeing PBS specials on the civil rights movment, so, yes, they very much believe in the existence of blacks.

But Hispanics are virtually invisible to important news media people in America. They see them when they visit Santa Fe, but otherwise, they don't occupy any space in their mental universe.

So, in the media mind, mortgage defaults by minorities can't possibly play an important role because, well, a minority is less than a majority, so therefore it can't be of any significance.

All the evidence I've seen, however, suggests that defaults by Non-Asian Minorities (NAMs) played a big role in precipitating the current crisis. But, I haven't yet seen anybody calculate a single number estimate of the size of that role. What we are really looking for is the share of all mortgage defaults, both by number and by dollar value, by NAMs. Foreclosures would be a reasonable proxy for defaults, although subprime share might not be.

To be even more accurate, we should look for the incremental defaults, above the usual expected baseline default rate. (Normally, lenders expect a small single digit percentage of defaults per year due to sad events and they plan for that rate. What's causing this wipeout is the higher than expected rate.)

Below is a trove of information posted by a commenter named david. Perhaps a reader could go through the links and figure out what that share is.

david commented

eh said:

Some statistics on non-white delinquency and defaults across all mortgage grades and loan types would be interesting to see.

Don't know if this will help you, but below I copied and cleaned up a recent (9/22) comment by an Anonymous.

Below each hyperlink is a juicy excerpt or preview therefrom.

Enjoy.

***


Someone said, "My criticism of your VDare piece is it implies that minorities are more likely to default on their loans. This is probably true. Please show the statistics to back it up. My second criticism is that the dollar value of losses may not be disproportionally [sic] minority caused."

See cites below. They show:

a) Default rate is higher among minorities; and

b) Minorities are more likely to have subprime loans even at higher income levels. (Reason: income is not a perfect proxy for IQ, and high-income minorities are very disproportionately affirmative action recipients. See the regression to the mean in Prince George's County.)


LINK

"What insurers aren't allowed to do is discriminate based on race, no matter how actuarially sound their arguments. Blacks, for example, have shorter life expectancies on average than whites, but companies aren't allowed to charge black customers more for life insurance."


LINK

"Urban, Minority Foreclosures on the rise"


LINK

"A similar pattern can be seen in Chicago, where foreclosure filings tripled, to 7,576, from 1993 to 2005. Neighborhoods where the population is more than 80 percent non-white account for 65 percent of all cases, up from 61 percent in 1993, according to data compiled by the National Training and Information Center, a housing advocacy and research group based in Chicago. The same trends have been documented in Atlanta and Philadelphia, according to researchers from Harvard and the Reinvestment Fund, a Philadelphia-based investment organization hired by the Pennsylvania Department of Banking to study mortgage foreclosures in the state."


LINK

"The 10 neighborhoods with the highest rates of mortgages from subprime lenders had black and Hispanic majorities, and the 10 areas with the lowest rates were mainly non-Hispanic white.

"...the rate of subprime lending is far higher for minorities than for whites even at higher income levels. For example, 24 percent of non-Hispanic white borrowers earning $125,000 to $150,000 took out a subprime mortgage in 2006, compared with 52 percent of Hispanics and 63 percent of non-Hispanic blacks in the same income range."


LINK

"July 13, 2007--The National Association for the Advancement of Colored People stepped into the fight against subprime lending Wednesday when it sued 12 national mortgage-lending companies for discriminatory practices."


LINK

"But Hispanics and African-Americans were far more likely to leverage the American dream with subprime loans — higher-cost products for buyers with impaired credit — that are now going bad at an alarming rate.

"About 46% of Hispanics and 55% of blacks who took out purchase mortgages in 2005 got higher-cost loans, compared with about 17% of whites and Asians, according to Federal Reserve data. The South Side of Chicago, with a large concentration of minority borrowers, has a high concentration of subprime loans and the state's highest foreclosure rate. In Boston, where defaults are rising — especially in minority areas — 73% of high-income black buyers (those making $92,000 to $152,000) and 70% of high-income Hispanics had subprime loans in 2005, compared with 17% of whites.

"...Recent immigrants lack credit histories, and 35% of Latino families don't have checking accounts. Hispanic families are more apt to have undocumented income, leading them to lenders who make loans without income verification, according to the National Council of La Raza.[...]

"Another reason for the subprime surge: Lenders have been supported by politicians and community leaders eager to promote minority homeownership, which remains about 25 percentage points below that of white non-Hispanics.

"'Access became such a buzzword that people forgot about basic lending practices,' says Keith Corbett, executive vice president of the Center for Responsible Lending. 'You are really in debt servitude, having a loan with a loan-to-value ratio of 100% or greater.'"


LINK

"High-cost subprime mortgages have often been framed as loans that catered to people with blemished credit records or little experience with debt.

"There has been less attention paid to the concentration of these loans in neighborhoods that are largely black, Hispanic, or both. This pattern, documented in federal loan records, holds true even when comparing white middle-income or upper-income neighborhoods with similar minority ones."


LINK

"The Joint Center for Political and Economic Studies reports that the rate of subprime mortgages for Latinos and African Americans is about double the rate for whites. In 2006, subprimes made up one in four mortgages (26 percent) made to whites, 47 percent of those to Latinos and 53 percent of mortgages that went to African Americans."


LINK

"Illegal immigrants were able to buy U.S. homes during the boom years, either by showing evidence that they pay taxes or by simply presenting false documents. Many of them took out high interest fixed-rate loans or subprime mortgages with a low entry rate that later rose sharply."


LINK

"It boggles the mind to think how many illegal aliens are homeowners in this country thanks to these programs, all fully insured by our government. Because of fear of lawsuits for discrimination I can also tell you that a lender may have a borrower who speaks little or no English who claims to be either a citizen or resident alien and it will not be questioned nor any proof required."


LINK

"In a world devoid of lending discrimination, therefore, minority mortgage holders as a group will tend to have higher default rates than the pool of white mortgage holders."


LINK

"Austan Goolsbee: Also, the historical evidence suggests that cracking down on new mortgages may hit exactly the wrong people. As Professor Rosen explains, 'The main thing that innovations in the mortgage market have done over the past 30 years is to let in the excluded: the young, the discriminated against, the people without a lot of money in the bank to use for a down payment.' It has allowed them access to mortgages whereas lenders would have once just turned them away.

"The Center for Responsible Lending estimated that in 2005, a majority of home loans to African-Americans and 40 percent of home loans to Hispanics were subprime loans. The existence and spread of subprime lending helps explain the drastic growth of homeownership for these same groups. Since 1995, for example, the number of African-American households has risen by about 20 percent, but the number of African-American homeowners has risen almost twice that rate, by about 35 percent. For Hispanics, the number of households is up about 45 percent and the number of homeowning households is up by almost 70 percent."


LINK

"Obama, Like Dodd and Conrad, Got Cheap Home Loan

"Wednesday, July 2, 2008 10:36 AM

"By: Rick Pedraza

"Presidential nominee Barack Obama joins the list of several other high-profile Democratic Party members who received highly favorable home loans.

"Obama, D-Ill., reportedly purchased a $1.65 million mansion in Chicago through a 'super, super jumbo' loan he received from Northern Trust Bank in Illinois, the Washington Post reports.

"The portion of the money financed through the lender ($1.32 million) was offered to the Obamas at an unusually low discount interest rate locked in at 5.625 percent over the life of the 30-year fixed-rate loan, which was below the average of what a typical Chicagoan pursuing a similar low loan rate received at the time.

"For his part, Obama and his camp are defending the lower rate as lender competition for business. A spokesman for the camp says, 'The Obamas have since had as much as $3 million invested through Northern Trust.'

"Obama joins Sen. Chris Dodd, D-Conn., and Sen. Kent Conrad, D-N.D., on the list of high-profile public figures who received 'VIP' loans that some now are scrutinizing as alleged trade-offs for political favors.

"According to a report released last month by Condé Nast, Dodd received highly favorable loans under the designation, 'Friend of Angelo,' a reference to embattled Countrywide Financial Corp. head Angelo Mozilo.

"Dodd, who chairs the Senate Banking Committee, received loans from Countrywide that reportedly saved him tens of thousands of dollars.

"Conrad also has been named as a recipient of special-consideration loans from the beleaguered lender.

"Countrywide is the same bank involved in the loan scandal that caused Obama's vice presidential Vetting Team Chief James Johnson to resign amid criticism over his personal loan deals with the lender.

"Other high-ranking political officials involved in questionable 'VIP' home loans include former Secretary of Housing and Urban Development Alphonso Jackson, former Secretary of Health and Human Services Donna Shalala, and former U.N. ambassador and assistant Secretary of State Richard Holbrooke, Condé Nast reports."

**

Have a nice day, eh.

9/25/2008

My published articles are archived at iSteve.com -- Steve Sailer

24 comments:

daveg said...

Wasn't there an economist who covered some of this in the NY Sun? I think he was a prof at a Texas school and he had a jewish name?

I am serious, the paper came out about 3-4 months ago. I thought I saw it discussed in WND.com as well.

Bob said...

I live in Southern California where Hispanics nearly outnumber nons overall, but I don't think I have spoken more than one sentence to a hispanic, other than my maid, in more than 3 months. I don't think I have physically seen a hispanic person in many days as well.

The degree of physical and economic segregatio is quite large. here

Anonymous said...

I want to see foreclosure rates for people who have social security numbers, people who have ITIN and people who don't have either.

Anonymous said...

The issue isn't whether NAMs cause banks more losses. They can only be blamed for the mortgage crisis to the extent they have a higher default rate relative to their interest rate and loan fees.


I think the line of argument you were running with earlier, that immigration caused the housing bubble by making desirable areas more crowded, and reducing the number of safe neighborhoods, is a lot more fruitful.

A slightly irresponsible black person who always makes payments sufficient to avoid foreclosure, but pays a high interest rate to start and also pays a variety of fees and penalties, is a lot better bank customer than a more anal white customer who shops around for the absolute lowest interest rate, refinances the minute he can get a lower rate, and never pays any late fees because he sets up an automatic debit.

eh said...

I must belatedly thank david for his remarkably generous reply.

simon newman said...

When I visited northern California from the UK at the start of 2007 I experienced what appeared to be an Hispanic state with white enclaves. The whites I met though seemed to me to be living in a state of denial - to them, it was a white state with Hispanic enclaves. I'd had a similar experience in New Mexico several years previously.

The invisibility of Hispanics to middle-class whites is a strange and remarkable phenomena.

Joe said...

"Neighborhoods where the population is more than 80 percent non-white account for 65 percent of all cases, up from 61 percent in 1993"

Such statements pretty much disprove the claim that the housing crisis is due to foreclosures on minorities. Does this really need explicating? If the rise in foreclosures had been predominantly due to a higher percentage of foreclosures occurring to minorities, the overall rise would have been minimal - the 4% differential in the quote above equates to a lower boundary of less than 2% overall (otherwise "minorities" would be a misnomer).
Actually no variation in defaults beyond historical norms was required at all to cause the housing crisis. It perfectly sufficed to create risk models that cherrypicked historical data in the interest of maximizing turnover, market share and profits in the financial industry and ultimately ran up against reality.
Greed miscalculates, no matter what size IQ it is paired with.
(And the idea that a rising percentage of home owners is somehow unnatural pretty much implies that there can be no such thing as economic progress. One would assume that relentless economic growth continuing for centuries would ultimately also lead to a higher degree of affordability of the biggest-ticket item.)
BTW: Which minority caused the Great Depression? The Nisei, perhaps?

rightsaidfred said...

I've noticed some NPR stories are scrubbed of any knowledge of illegal immigration. I recall in particular an interview with an author who was showing that immigrants commit less crime than native born. This author conveniently left out any data on illegal immigrants, but the interviewer made no mention of this.

Where some nations have a psychosis for blaming foreigners for their problems (North Korea) we seem to have the opposite problem.

>>>>Obama and his camp are defending the lower rate as lender competition for business.

Ha! Since when did these people ever have any belief in competition?

>>>>"Obama joins Dodd, et al on the list of high-profile public figures who received 'VIP' loans...

We are getting double whammied by this personal grabbiness and by political whoring after 'groups', so that our politicians are falling over each other to give things away to garner various blocks of votes.

Dennis Mangan said...

I wrote a post last year in which I estimated (the operative word) that whites hold only 10% of subprime loans.

http://mangans.blogspot.com/2007/12/mortgage-crisis-and-immigration.html

Anonymous said...

"What insurers aren't allowed to do is discriminate based on race, no matter how actuarially sound their arguments. Blacks, for example, have shorter life expectancies on average than whites, but companies aren't allowed to charge black customers more for life insurance."a

Yes, but I what insurance companies do do, at least where I worked, is give lower payoffs to black clients who have been injured and thereby rendered unable to work, based on their shorter life expectancies.

daveg said...

Here is a link, but it has less information than I remember.

Link

David Davenport said...

Any business that has to have suckers for customers in order to be profitable is a bad business, both morally and in practical reality.


A slightly irresponsible black person who always makes payments sufficient to avoid foreclosure, but pays a high interest rate to start and also pays a variety of fees and penalties, is a lot better bank customer than a more anal white customer who shops around for the absolute lowest interest rate, refinances the minute he can get a lower rate, and never pays any late fees because he sets up an automatic debit.

anony-mouse said...

1/ It may be true that insurance companies can't charge blacks more for life insurance, but don't complain because those same blacks are being cheated by paying the same for social security.

2/ I don't know about DC, but New Yorkers have long known about large numbers of Hispanics in their city, especially on the West Side...

And in Spanish Harlem.

Anonymous said...

anony-mouse - nice try there with your social security example but, sorry, no, not having it.

Im willing to bet that, early death notwithstanding, blacks take more out of the SS system than they pay in.

ben tillman said...

Im willing to bet that, early death notwithstanding, blacks take more out of the SS system than they pay in.

So do whites -- at least those who have already retired. In the future, it will be different.

Tootalljones said...

All the evidence I've seen, however, suggests that defaults by Non-Asian Minorities (NAMs) played a big role in precipitating the current crisis. But, I haven't yet seen anybody calculate a single number estimate of the size of that role. What we are really looking for is the share of all mortgage defaults, both by number and by dollar value, by NAMs. Foreclosures would be a reasonable proxy for defaults, although subprime share might not be.


I think the reason you havent seen any single number calculated is because the notion is dubious. Of course, certain minorities are worse credit risks and may thus default more, but it doesn't follow that they played a "big role" in the crisis. How many of the "crisis" loans were made to those bad minority credit risks and defaulters? That is the one thing, neither you or other propounders of this theory can come up with. You should also note that all minorities, both between and within groups are not alike. A certain percentage of blacks for example is less credit worthy, but a certain percentage is also credit worthy. Where are the stats differentiating between the performance of the two in this "crisis"? Holders of your theory cannot produce any credible ones.

tootalljones said...

assorted posters said:

a) Default rate is higher among minorities; and

"What insurers aren't allowed to do is discriminate based on race, no matter how actuarially sound their arguments. Blacks, for example, have shorter life expectancies on average than whites, but companies aren't allowed to charge black customers more for life insurance."


All well and good but where is the data showing that said minorities had a disproportionate share of the bad loans sufficient to play a significant role in the current crisis? That is the missing link assorted claimants keep ducking.

tootalljones said...

assorted posters said:
b) Minorities are more likely to have subprime loans even at higher income levels. (Reason: income is not a perfect proxy for IQ, and high-income minorities are very disproportionately affirmative action recipients. See the regression to the mean in Prince George's County.)


What a load of BS. What does affirmative action have to do with it? And who says "high-income minorities are very disproportionately affirmative action recipients?" Any data to back up this claim? Even Thomas Sowell points out that BEFORE the era of affirmative action blacks had already pulled themselves above the poverty line and were accelerating into higher income positions. The reason for this long-standing trend was not "affirmative action" but the post-WWII economic boom, things like the GI bill which applied to ALL Americans and gave many an opportunity to attend college, and the plain old hard work of Black Americans. But go ahead, post your "evidence". Let's see what you got..

tottalljones said...

"A similar pattern can be seen in Chicago, where foreclosure filings tripled, to 7,576, from 1993 to 2005. Neighborhoods where the population is more than 80 percent non-white account for 65 percent of all cases, up from 61 percent in 1993, according to data compiled by the National Training and Information Center, a housing advocacy and research group based in Chicago. The same trends have been documented in Atlanta and Philadelphia, according to researchers from Harvard and the Reinvestment Fund, a Philadelphia-based investment organization hired by the Pennsylvania Department of Banking to study mortgage foreclosures in the state."

Sure you have 'hoods where there may be a large number of said loans, but again, how significant is this to the overall "crisis" picture? Also the same gubment reports referenced note that minorities are underrepresented in overall loans given, hardly the picture of them tipping the US economy into bankruptcy.

Indeed, the number 3 city for foreclosures/defaults on CNN's "foreclosure list is Denver- a city almost 70% white. Funny how those who want to use minorities as whipping boys seem to skip over this.

http://money.cnn.com/2007/06/19/real_estate/500_top_foreclosure_zip_codes/

The link also says: " The most foreclosure activity is clustered in two area; old Rust-Belt areas and new Sun-Belt ones. More than a quarter of all leading foreclosure zip cdes are in California but many of the worst-hit zip codes are in the Midwest.

There are obviously several OTHER factors in play here than simply being a "minority", undramatic as that may seem.

tootalljones said...


"...Recent immigrants lack credit histories, and 35% of Latino families don't have checking accounts. Hispanic families are more apt to have undocumented income, leading them to lenders who make loans without income verification, according to the National Council of La Raza.[...]

"Another reason for the subprime surge: Lenders have been supported by politicians and community leaders eager to promote minority homeownership, which remains about 25 percentage points below that of white non-Hispanics.

"'Access became such a buzzword that people forgot about basic lending practices,' says Keith Corbett, executive vice president of the Center for Responsible Lending. 'You are really in debt servitude, having a loan with a loan-to-value ratio of 100% or greater.'"


Of course, but note- Keith Corbett isnt saying "too many loans were being made to minorities"- he is pointing out that the systematic practice of bad loans was happening ACROSS THE BOARD. Minorities may have been used as a stalking horses to burnish "diversity" talking points, but you have produced little showing that minorities played a "big role" in the current crisis. City zip codes may include mostly white suburbs that outnnumber the central core in population. So again, where's the beef?

tootalljones said...

"...Recent immigrants lack credit histories, and 35% of Latino families don't have checking accounts. Hispanic families are more apt to have undocumented income, leading them to lenders who make loans without income verification, according to the National Council of La Raza.[...]
"Another reason for the subprime surge: Lenders have been supported by politicians and community leaders eager to promote minority homeownership, which remains about 25 percentage points below that of white non-Hispanics.
"'Access became such a buzzword that people forgot about basic lending practices,' says Keith Corbett, executive vice president of the Center for Responsible Lending. 'You are really in debt servitude, having a loan with a loan-to-value ratio of 100% or greater.'"


Of course, but note- Keith Corbett isnt saying "too many loans were being made to minorities"- he is pointing out that the systematic practice of bad loans was happening ACROSS THE BOARD. Minorities may have been used as a stalking horses to burnish "diversity" talking points, but you have produced little showing that minorities played a "big role" in the current crisis. City zip codes may include mostly white suburbs that outnnumber the central core in population. So again, where's the beef?


LINK

"High-cost subprime mortgages have often been framed as loans that catered to people with blemished credit records or little experience with debt. "There has been less attention paid to the concentration of these loans in neighborhoods that are largely black, Hispanic, or both. This pattern, documented in federal loan records, holds true even when comparing white middle-income or upper-income neighborhoods with similar minority ones."

The fallacy of using this example is that you have not established how significant said loans are to the OVERALL loan crisis. I am sure in Harlem you will find more bad loans than a swanky white suburb, but again, how significant is this weight to the OVERALL crisis? That is what you have failed to produce.


"The Joint Center for Political and Economic Studies reports that the rate of subprime mortgages for Latinos and African Americans is about double the rate for whites. In 2006, subprimes made up one in four mortgages (26 percent) made to whites, 47 percent of those to Latinos and 53 percent of mortgages that went to African Americans."
Same as above. No one is disputing that certain minorities get more subprimes, but how significant is that to the OVERALL crisis? Are they 70% of what is causing the meltdown? 50%? what? Where is your data?


"Illegal immigrants were able to buy U.S. homes during the boom years, either by showing evidence that they pay taxes or by simply presenting false documents. Many of them took out high interest fixed-rate loans or subprime mortgages with a low entry rate that later rose sharply." "It boggles the mind to think how many illegal aliens are homeowners in this country thanks to these programs, all fully insured by our government. Because of fear of lawsuits for discrimination I can also tell you that a lender may have a borrower who speaks little or no English who claims to be either a citizen or resident alien and it will not be questioned nor any proof required."

Where's the beef? Same as above...


"Austan Goolsbee: Also, the historical evidence suggests that cracking down on new mortgages may hit exactly the wrong people. As Professor Rosen explains, 'The main thing that innovations in the mortgage market have done over the past 30 years is to let in the excluded: the young, the discriminated against, the people without a lot of money in the bank to use for a down payment.' It has allowed them access to mortgages whereas lenders would have once just turned them away.

What you say here contradicts your own notion of minorities having a big role in the current crisis. Note- those categories of risky loans- the young, discriminated against (that could be white women by the way, or low income white dudes), people without a lot of money in the bank,.. etc.. These broad categories include a lot of white people. What percentage of the crisis is caused by minorities versus what percentage is caused by these "other" white people? You have yet to produce any credible data to backup your assertions.

tootalljones said...

What insurers aren't allowed to do is discriminate based on race, no matter how actuarially sound their arguments. Blacks, for example, have shorter life expectancies on average than whites, but companies aren't allowed to charge black customers more for life insurance."

This is BS. Insurance companies can't charge higher premiums based on life expectancy? Since when? What the companies can't do is base their decision soley on race. They have to include other things like age, region, health conditions etc., but I know of no insurance companies who are writing policies and ignoring life expectancy. So you mean to tell me that a 70 year old black guy is gonna get the same insurance deal as a 30yr old black guy, even though their life expectancy outcomes will differ significantly? Get outta town man...


someone else said:
Yes, but what insurance companies do, at least where I worked, is give lower payoffs to black clients who have been injured and thereby rendered unable to work, based on their shorter life expectancies.
Exactly. At some point, they will have adjust for life expectancy, they dont just "ignore" it as suggested above.


A slightly irresponsible black person who always makes payments sufficient to avoid foreclosure, but pays a high interest rate to start and also pays a variety of fees and penalties, is a lot better bank customer than a more anal white customer who shops around for the absolute lowest interest rate, refinances the minute he can get a lower rate, and never pays any late fees because he sets up an automatic debit.
This may well be, and it contradicts the notion of "blacks" being exempt from the rules other Americans live by. That is not the case. You, me and "they" pay for their mistakes one way or another. Keep in mind too that all blacks aren't alike. Too often those who place all their faith in broad statistics ignore this reality. Based on the approach, where "stats" are supposed to determine everything, there should be no male school teachers, because based on the stats, males are more likely to be involved in molestation activity than females. I don't see anyone seriously advocating a "no male teacher" campaign however. Too often however, people throw away common sense when it comes to "blacks".

Blode said...

Tootal L. Jones wrote:
"And who says "high-income minorities are very disproportionately affirmative action recipients?" Any data to back up this claim?"

What Thomas Sowell actually said on the matter was:
"In the United States as well, affirmative action has been a boon to those already more fortunate. A study of a random sample of minority beneficiaries of government contracts set aside by the Small Business Administration showed that more than two-thirds of these beneficiaries had net worths of more than a million dollars each.... Yet, when some members of Congress publicly opposed such programs, Congressman Charles Rangel from Harlm compared them to Hitler and depicted any attempt to roll back affirmative action as an attack on all blacks.... In short, the affirmative action era in the United States saw the more fortunate blacks benefit while the least fortunate lost ground in terms of their share of incomes." (Affirmative Action Around the World, p. 120)

Sowell is obviously not the first to note that the black middle class rose largely before the "civil rights era" of massive Federal meddling, and has declined since then. Affirmative action has had largely the same effects in the United States as it has in other countries - the destruction of merit-based hiring and college admissions, the creation of privileged classes among previously disadvantaged groups, a general widening cycle of corruption.

While he doesn't use the word "corruption" (he's too generally polite to write that way) it's clear from his recent NRO article that Sowell believes the Community Reinvestment Act and laws of that ilk to be nothing better than run-of-the-mill race politicking.

Too tall jones said...

Blode said...

What Thomas Sowell actually said on the matter was:
"In the United States as well, affirmative action has been a boon to those already more fortunate. A study of a random sample of minority beneficiaries of government contracts set aside by the Small Business Administration showed that more than two-thirds of these beneficiaries had net worths of more than a million dollars each.... Yet, when some members of Congress publicly opposed such programs, Congressman Charles Rangel from Harlm compared them to Hitler and depicted any attempt to roll back affirmative action as an attack on all blacks.... In short, the affirmative action era in the United States saw the more fortunate blacks benefit while the least fortunate lost ground in terms of their share of incomes." (Affirmative Action Around the World, p. 120)


True enough, but the original claim was a shaky blanket statement- i.e. "high-income minorities are very disproportionately affirmative action recipients.." . I agree that AA in many instances has helped the more fortunate in much larger proportion than the "disadvantaged" in whose name it is advocated. But as a blanket statement, the notion is contradicted by the fact of some of the highest income Americans anywhere- namely black entertainers and athletes. It is also contradicted by long-standing trendlines of black progress before AA.

I have no problem with a statement saying that SOME high income minorities have benefitted disproportionately by AA. Of course. Same thing could be said for SOME white women, like some well-heeled white feminist college professors that scored big when Womyn's Studies Departments were created on some campuses. Same thing could be said of the discriminatory Jim Crow policies that benefitted SOME white people by locking blacks out of numerous opportunities until fairly recently in US history. But when it comes to blanket claims about "high-income minorities being disproportionately AA recipients" such arguments are dubious, and since Asians are minorities as well, the claim is even more shaky.

Sowell draws a sharp distinction between 'equal opportunity' - fair treatment across the board- and "affirmative action" (open or disguised quotas and body counts). He shows that gubment policies that apply evenly across the board regardless of race (equal opportunity) are often of more help to minorities that preferential policies (quotas). The GI Bill for example applied to ALL veterans of the armed forces and was responsibe for large numbers of Americans of all types going to college. In its early phases, many southern Jim Crow gatekeepers sought to limit or delay black access, or stipulated it could only be used by blacks if they went to segregated colleges. Despite this however, this across the board measure, promoted substantial access to higher education for blacks when the entire population pool is considered, much more than the "diversity" body counts of various liberal colleges. Equal opportunity policies finally cut down remaining discrimination in access, and black progress continued its already established upward swing.

In short, across the board policies like the GI Bill, the post wwII economic growth, etc, etc put a small but significant slice of blacks well on the way to high income status, independent of any significant influence from the quotas of "affirmative action." And that's regular black folks- not black athletes and entertainers. This of course is a message the "minorities and affirmative action are to blame for all our problems" crowd does not want to hear.



Sowell is obviously not the first to note that the black middle class rose largely before the "civil rights era" of massive Federal meddling, and has declined since then. Affirmative action has had largely the same effects in the United States as it has in other countries - the destruction of merit-based hiring and college admissions, the creation of privileged classes among previously disadvantaged groups, a general widening cycle of corruption. While he doesn't use the word "corruption" (he's too generally polite to write that way) it's clear from his recent NRO article that Sowell believes the Community Reinvestment Act and laws of that ilk to be nothing better than run-of-the-mill race politicking.

Again true, and I agree that there is a privileged class in existence that lives on the trappings of "diversity", including not only high income blacks, but an assortment of high-income whites who are doing quite well administering the levers of the "diversity" machine in the name of "social justice." Sowell pointed out something similar as far back as his 1975 Race and Economics where he noted that the poor are a goldmine for people with other agendas.

I have no basic disagreement with the argument that the CRA regs were used as the platform of some mau-mauing, extortion, race politicing, and Jesse/Sharpton style race-hustling for the benefit of assorted activists and "community organizers". Sure it happened. Obama's ACORN friends are a good example. No question. I take exception however to the dubious notion that CRA covered institutions and their so-called "affirmative action" sub-prime loans to minorities played a "big role" in the current meltdown.

If anything, CRA covered loans only covered around 25% of that picture and were more tightly administered than the wild west shennigans of the rest of the financial sector. As one Biz Week article puts it the CRA coverages "were less likely to end up securitized into the mortgage-backed securities that have caused so many losses, according to a recent study by the law firm Traiger & Hinckley.." See http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf.

Ironically, sub-primes performed relatively well under the Clinton regime as Biz Week notes.
http://www.businessweek.com/investing/insights/blog/archives/2008/09/community_reinv.html