Racism and right-wing extremism have returned with a boldness not seen since the Jim Crow era. The signs are clear. Right-wingers openly gloated about the police killing of unarmed African-American teenager Michael Brown Jr., shortly after they lionized armed racists at the Bundy ranch who challenged the existence of the U.S. government. Meanwhile, George Zimmerman basked in the folk-hero status that conservatives bestowed on him after he killed unarmed African-American teenager Trayvon Martin. To complete the picture, there are attacks on voting rights, anti-immigrant outbursts, and the spectacle of the Republican governor of Maine, Paul LePage, embracing a group regarded as a “domestic terrorist movement” by the FBI.
The explanation for resurgent hate-mongering seems equally clear: the country elected and re-elected an African-American president. If we need another explanation, we can cite white conservatives’ fears about immigration and changing U.S. demographics. But a central cause of the racist revival has gone unnoticed. Right-wingers opened a toxic new era of racism when they decided to scapegoat minorities for the financial crisis.
The crisis, and the bipartisan giveaways to the banks that were responsible for it, demolished conservatives’ claims about regulation and made a joke of their professed devotion to “fiscal responsibility” and “self-reliance.” Naturally, Republican politicians and right-wing media could not allow their followers to see the crisis in its true light. They needed to find someone to take the fall for Wall Street’s thefts. So they launched a massive campaign to blame racial minorities, especially African Americans.
At the center of that campaign is the 1977 Community Reinvestment Act. The CRA set out this objective for federal bank regulators:
to require each appropriate Federal financial supervisory agency to use its authority when examining financial institutions, to encourage such institutions to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions.
The law was designed to discourage “redlining,” in which banks refuse to make loans to residents of certain neighborhoods, irrespective of the applicants’ credit. Redlining is a cornerstone of housing discrimination motivated by race bias, class bias, or both. With good reason, the authors of the CRA believed that if a bank accepts deposits from residents of a particular area, the bank should not systematically exclude those residents from its services.
Did that law cause an economic meltdown three decades after it passed? Let’s look at what the experts say. Dean Baker, an economist who issued early warnings about the dangers of the housing bubble, has repeatedly written that the Community Reinvestment Act is not to blame for the financial crash. In 2011, Baker wrote: “The biggest actors in the subprime market were mortgage banks like Ameriquest and Countrywide . . . They were not covered by the CRA.” “Many of the worst loans were made to finance homes purchased in newly created exurbs,” Baker added. “The CRA is about having banks make loans in inner city areas where they take deposits.”
The U.S. government’s Financial Crisis Inquiry Commission reached the same conclusion. In its 2011 report, the Commission stated that “the CRA was not a significant factor in subprime lending or the crisis . . . Research indicates only 6% of high-cost loans—a proxy for subprime loans—had any connection to the law.”
Even Bloomberg Businessweek published a piece rejecting right-wingers’ attempts to blame the CRA for the crisis. In a September 2008 article in that publication, Aaron Pressman wrote that “loans made under the CRA program were made in a more responsible way than other subprime loans.” In fact, “CRA loans carried lower rates than other subprime loans and were less likely to end up securitized into the mortgage-backed securities that have caused so many losses.”
Pressman also offered helpful suggestions for anyone looking for government policies that contributed to the crash.
Better targets for blame in government circles might be the 2000 law which ensured that credit default swaps would remain unregulated, the [Securities and Exchange Commission’s] puzzling 2004 decision to allow the largest brokerage firms to borrow upwards of 30 times their capital and that same agency’s failure to oversee those brokerage firms in subsequent years as many gorged on subprime debt.
Of course, that sort of analysis was the last thing leading conservatives wanted their followers to see. The Community Reinvestment Act was a terribly weak basis for a frame-up, but rightists lacked a better one. So they pushed their trumped-up case as hard as they could.
On September 25, 2008—ten days after Lehman Brothers filed for bankruptcy protection—Laura Ingraham was a guest on The O’Reilly Factor. Host and guest both endorsed the lie that the crash was due to CRA-driven efforts to force banks to make home loans to “minority communities.”
Ingraham: Bill, the problem here is government intervention in the free markets. Nineteen ninety-five, when Bill Clinton decided to tell, you know, Robert Rubin to rewrite the rules that govern the Community Reinvestment Act and push all these institutions to lend to minority communities, many were very risky loans. That was a noble idea, perhaps, but that certainly wasn’t following free-market principles. This big pressure on institutions to dole out money and these risky loans started this whole ball rolling at Fannie [Mae] and Freddie [Mac].
O’Reilly: I don’t disagree with you.
That same month, Fox News anchor Neil Cavuto put the same message more succinctly: “Loaning to minorities and risky folks is a disaster.” In October 2008, Lisa Schiffren at National Review offered the McCain campaign advice on how to address the financial crisis:
Obama and his allies . . . overrode traditional banking norms, which they called racist. Now we are all paying for their leftist ideology. For a real fight, mention the Community Reinvestment Act.
Sean Hannity followed the same line in November 2008, saying that “The federal government and the Democrats, they forced these banks, through the Community Reinvestment Act, to make these risky loans.”
The right’s obsessive scapegoating has continued apace since 2008. In 2010, Glenn Beck called the CRA a “scheme that really led to all of the things that we’re now having to bail banks out for.” And here is Rush Limbaugh in 2013: “There was a thing called a Community Redevelopment or Reinvestment Act. I’m not sure of the title.” It appears that you have researched this matter carefully, Mr. Limbaugh. Please continue. “[The CRA] was a plan designed to get people into houses who had no business being in houses because they couldn’t afford them.” Limbaugh then specifically excused Wall Street: “You might have heard that the banks were responsible, that the banks did this. The banks were under federal orders.” Lest his listeners miss the point of his broadcast, Limbaugh said: “Most of the beneficiaries of the subprime mortgage were minorities.” Lest his listeners still miss the point, he added: “Racial minorities.”
Those lies by Limbaugh were double-barreled. The evidence indicates that most borrowers who received subprime loans were white. More fundamentally, the “beneficiaries of the subprime mortgage,” as Limbaugh calls them, were not the people who took out those loans. The true beneficiaries were the financial institutions that bundled worthless home loans into securities, sold them to unsuspecting customers, crashed the world economy by doing so, and then received a fortune in government handouts.
Right-wingers’ cover-up for Wall Street created an ugly new strain of race-baiting. Fox-watching, Limbaugh-listening white people had long been presented with vicious stereotypes of minorities, particularly African Americans. The two main stereotypes are the violent criminal and the welfare cheat: witness George H.W. Bush’s Willie Horton campaign ads and Ronald Reagan’s fictitious Chicago welfare queen. But terrible as those slurs are, they have certain limits.
Before the ’08 crash, if you were a white conservative living in a suburb, small town, or rural area with few black residents, your fear of black criminals probably did not seem an immediate, daily threat (depending, of course, on your level of paranoia). And, as much as you might fulminate against “minorities and illegal immigrants on welfare,” your (fictitious) grievance against them was probably restricted to complaining about paying taxes to support “freeloaders.”
All that changed in the wake of the right’s post-crash scapegoating. In Foxworld, the urban thug and the welfare queen both graduated to white-collar crime on a global scale. After September 2008, if you or someone close to you lost a job, lost a home, or suffered other economic fallout, conservative media were there to tell you that greedy minorities were the ones who did it to you. It was—is—a whole new chapter in the classically American story of misdirected anger.
It is easy to see the impact of that gross distortion of reality. If you believe the Fox-Rush gang, you believe that your post-2008 economic struggles were caused by minorities, and especially black people, taking homes they didn’t deserve and threatening your job and home by wrecking the economy. That belief lies at the root of the current manifestation of racism, which is intensely focused on the idea of defending home and neighborhood. George Zimmerman is a hero to conservatives because they regard him as a man ready to use force to stop the black threat to the neighborhood—or in his words, stop a “fucking punk” who was “looking at all the houses” and “up to no good.” Cliven Bundy takes on a similar role for right-wingers, claiming to defend God-given property rights against a black man in the White House. Bundy’s friends at Fox News Channel distanced themselves from him when he stated their racism a little too explicitly, but neither the appeals to armed violence nor the racism underlying them are going away any time soon.
If that seems far-fetched, consider the case of Representative Steve King (R., Iowa), who equated President Obama with Kim Jong-un because of the U.S. Patent and Trademark Office’s decision to cancel the Washington Redskins’ trademark. Back in September 2009, King took a leading role in the effort to protect the banks by demonizing minorities. In a speech on the floor of the U.S. House of Representatives, he characterized the financial crash by combining the stereotype of the black welfare queen with the stereotype of the black criminal, throwing ACORN into the mix for good measure.
These are the things, some of the things, that ACORN has done. They’ve contributed to the toxic-mortgage situation that brought about the economic meltdown, just a year ago. And they’ve done so by shaking down lenders, by demanding contributions from lenders.
Rep. King’s speech displays all the elements of the right’s racist scapegoating: corrupt minorities and their allies staging a shakedown, demanding homes and money they don’t deserve, while powerless white bankers are compelled to go along. And those imaginary events are supposed to have taken place when George W. Bush was president, before Barack Obama—described by conservatives as a black “thug” from Chicago—moved into the White House.
If you believed right-wingers’ explanation for the crash and recession, you would wonder what could possibly stop the onslaught against your livelihood by minority home-stealers/economy-wreckers and their federal allies. You would view white police officers as a crucial line of defense against black lawlessness. You might even conclude that nothing short of “Second Amendment solutions” could save you.
Conservatives took the anger caused by the financial crisis and diverted it from Wall Street to minorities and government programs designed to fight racism and help the poor. Given the persistence of those smears, and the scope of economic suffering since 2008, we should not be surprised by the upsurge in racism nor by the emergence of heavily armed right-wing cadres, preaching insurrection. We should be surprised that it has not been worse.