Not from The Onion

The New York Times today appears to be trying to illustrate Auster's First Law of Majority-Minority Relations in a Liberal Society:

"The worse any designated minority or alien group behaves in a liberal society, the bigger become the lies of Political Correctness in covering up for that group." (source)

From the NYT:

Justice Dept. Fights Bias in Lending
By CHARLIE SAVAGE

WASHINGTON — The Justice Department is beginning a major campaign against banks and mortgage brokers suspected of discriminating against minority applicants in lending, opening a new front in the Obama administration’s response to the foreclosure crisis.

Tom Perez, the assistant attorney general for the department’s Civil Rights Division, is expected to announce Thursday in New York that the administration is creating a new unit that will focus exclusively on unfair lending practices.

“We are looking at any and every practice in the industry,” Mr. Perez said in a recent interview.

As part of an expansion of the Civil Rights Division approved by Congress last year, the Justice Department is hiring at least four lawyers and an economist for the new unit, while about half a dozen current staff members will transfer into it.

Mr. Perez plans to formally announce the new unit at the “Wall Street Project” conference organized by the Rev. Jesse Jackson’s Rainbow/PUSH Coalition. He characterized the effort as a major turnaround, and criticized the previous administration as failing to scrutinize lending practices amid the subprime mortgage boom.

While past lending discrimination cases primarily focused on “redlining” — a bank’s refusal to lend to qualified borrowers in minority areas — the new push will instead center on a more recent phenomenon critics have called “reverse redlining.” [Highlights mine]

Hopefully, the Obama Administration will arrest for promotion of "reverse redlining" George W. Bush, Bill Clinton, Henry Cisneros, Barney Frank, and Barack Obama.

In reverse redlining, a mortgage brokerage or bank systematically singles out minority neighborhoods for loans with inferior terms like high up-front fees, high interest rates and lax underwriting practices. Because the original lender would typically resell such a loan after collecting its fees, it did not care about the risk of foreclosure.

There's absolutely no question that lenders hired huge numbers of Hispanic and black boiler room workers. I thought the Justice Department was in favor of hiring Hispanics and blacks?

Maybe a better way for the government to prevent "reverse redlining" is stop making it punishable by discrimination lawsuits to mention the much higher risk of default among minorities?

It is a rarely used theory, and it carries political risks. Some critics have contended that government rules pushing banks to lend to minority and low-income borrowers contributed to the financial meltdown. The campaign could rekindle that debate.

Will the New York Times ever print the facts supporting that contention?

“They encourage lenders to make risky loans for reasons such as diversity, and then when lenders have a problem because they made too many risky loans, they condemn them for that,” said Ernest Istook, a fellow at the conservative Heritage Foundation and a former Republican congressman from Oklahoma.

Still, Mr. Istook emphasized that he was “not defending anybody who engages in wrongful redlining practices.”

A representative of the Mortgage Bankers Association, the lobbying arm of the real estate finance industry, did not respond to a request for comment.

Under federal civil rights laws, a lending practice is illegal if it has a disparate impact on minority borrowers, and the Obama administration is signaling that it intends to make the enforcing of fair lending laws a signature policy push in 2010.

Subprime lending was relentlessly marketed and endorsed as lessening the disparate impact of traditional credit standards.

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