Fraud and Cronyism Under Neoliberalism - A Feature, Not a Bug

In the comments section, Uncle Milton suggests that the massive fraud perpetuated under the Bush regime (I would add under Reagan too) were antithetical to a free market system. A true free market system is supposed to make fraud illegal.

By any definition of classical economics, what happened to the real estate market was fraud on a massive scale. PS No bid contracts in Iraq as you might guess as nothing to do with free market economics. Crony capitalism and corruption are in conflict with free market economics. If you take a turd, paint it white, and call it beautiful.. it's still a turd.

By your definition, Unc, free market economics hardly occurs anywhere. This seems to be the problem. Once these neoliberal systems are put in, they are very prone to corruption and crony capitalism. Extremely prone! Everyone wails about it, but it seems to be almost an inherent part of the system. A feature, not a bug.

And the proponents of the free market tend to be very tolerant of massive fraud to the point of not even tolerating it. The more free market the system, it seems the more fraud and cronyism.

As more socialist leaning groups come in, they tend to reign in the fraud to some extent. Europe has very low levels of fraud (it's considered to be a safe place to do business) and it has high levels of socialism in its system.

China moving from socialism to capitalism was followed by massive fraud and cronyism. Same with Russia and to a much lesser extent Eastern Europe. The neoliberal revolution in Latin America coincided with a tremendous amount of crony capitalism and fraud as state enterprises were sold off to friends of the state in a cronyist fashion for pennies on the dollar.

The way to reduce fraud and cronyism in a capitalist system is to empower the state more (social democracy). Culture also plays a role though.

As an aside, I would point out that the free market ideologists spreading the gospel of neoliberalism had almost nothing to say about the massive cronyism, fraud, graft and out and out theft associated with their neoliberal revolution.

While the billionaires looted Russia bare and bled the country dry, the Jeffrey Sachs (the mastermind of the plan and yes, he is Jewish) of the world said nothing. The corporate media mostly just cheered.

The Friedmanites out of the Chicago School have for the most part been fashioning a free market vision in which fraud, graft, cheating, lying and even out of out theft seems to be legal when done by big capitalists wearing suits under a legalistic veneer. There were few persecutions for the massive fraud that occurred under Reagan and now under Bush.

If, as Unc notes above, the financial crash was predicated on massive amounts of out and out crime, it should be clear to us in the next year or so that almost no one is going to go to jail over it.

The FBI looked into investigating the financial crash and seems to have decided that there were far too many criminals committing far too many crimes for the FBI to even begin to get involved at current staff levels, especially with the needs of the War on Terror, so it looks like most of the criminals are just going to get away with it.

As I note above, increasingly, it seems as if mass cronyism, fraud and financial crime in general under neoliberalism is more of a feature than a bug.

Great Video About Socialism

The latest death toll figures from Hurricane Katrina can be seen on this website here. The famous Russian neo-Nazi video is on this blog here.

Updated October 24:

This is a video of a lecture by Richard D Wolff, Professor of Economics at the University of Massachusetts Amherst, on the latest economic chaos and recession in sweeping the world.

Wolff is a Marxist, and the lecture is from a Marxist POV. However, it is interesting in many ways.

One thing that is clear to most sensible folks with an understanding of economics is that Marx's analysis of capitalism is one of the greatest ever done by anyone. For a long time, it was taught in all economics departments. With the advent of crazy Friedmanite neoliberalism in the past 30 years or so, Marx may not be being taught so much, but that's a mistake.

It's sometimes said that Marx is great for analyzing either what capitalism does well or poorly, but not the opposite. Not true. Marx is great for analyzing capitalism both when it is doing well and when it is doing poorly.

In my opinion, where Marx has problems is in proposing alternatives to capitalism, and history has born this out to some extent. Capitalism, with all of its chaos and problems and horrors and deaths, may just be the only way forward for the time being. Like death, disease and taxes, it may be a necessary evil.

Wolff describes how US workers saw 150 straight years of growth and improvement in their living standards, from 1820 to 1970. This is correct. He doesn't lay out how this happened, but there are many explanations for this. He also says that this scenario was rare to unheard of in the rest of the capitalist world.

After 1970, things changed. Productivity kept going up, but wages went flat or even went down. A US worker in the late 1970's made more per hour than a worker working today. As productivity rose and wages went flat, capitalists began raking in incredible profits.

This is what has happened to the US economy over the past 35 years, as neoliberalism took hold and 80% of the population saw its wages stagnate or go down. The top 20% of the population, and especially the top 1%, saw its income explode. But the vast majority of workers of every race got screwed.

As workers got more and more screwed and the capitalists, the owners, those who lived off the labor of others, saw their incomes skyrocket, confused workers began advancing all sorts of explanations about why this was happening. Anti-Semites, as usual, blamed the Jews. White nationalists and White Supremacists blamed Blacks and Browns. Lots of middle class and working class Whites blamed Big Government.

The truth was that the culprits were the business owners who were reeling in superprofits while workers got the shaft.

As this process continued, capitalists found more ways to keep the cost of labor down. They began importing massive amounts of legal and especially illegal immigrants as labor to drive labor costs down even further. They began moving many enterprises offshore and later, began offshoring work via the Internet.

Confused workers scrambled to keep up their standard of living. Others in the family, often the wife, began taking a job, bringing in a second income. Then one or more persons in the household began to work second and third jobs. Americans worked more and more hours, setting new records for workers in the West.

The despicable US media extolled this fact, and praised US workers for working themselves nearly to death, taking pains to point out how tough and hard and slaving-away Americans are compared to pampered, wussy, "soft" Europeans kicking back under socialism.

It's true - part of the US war against European social democracy has been to declare that Europeans are soft, wimpy, sissified and woosy. How did they get this way? Socialism turned hard self-reliant European men into soft, pampered girlymen. Americans were hard, tough and macho. They didn't need no nanny state to help them out. They could do it on their own. The American worker as Marlboro Man.

Wolff points out that that extra workers did not necessarily fix matters, as when the wife started working, it turned out that she needed many things, for instance a vehicle to get to work in.

Working more than one job didn't seem to work very well, nor did having others in the household go out and work, but it did the trick for a while.

After some time, Americans would have to turn to some new tricks to try to keep up their standard of living. They turned to loans. At first they ran up their credit cards. Americans were setting records for going into debt on credit cards and were among the Western world's poorest when it came to saving money.

This isn't really very good personal economics, but the vile media cheered it on nonetheless. Silly, wimpy Europeans and Japanese saved their money for a rainy day, presumably because they were too neurotic to enjoy life. Americans went for the gusto! They spent ever nickel they earned and then went in debt up to their waders! Cheers, cheers, cheers!

After the credit cards were maxed out, there was an explosion in US housing prices. Call it a housing bubble. This came at a propitious moment, for it enabled Americans to use as collateral the biggest asset they owned, their homes. Americans borrowed on their homes, refinancing them, taking out second mortgages and using the money like a credit card to continue to pursue the standard of living to which they had become used.

The capitalists continued to reel in the dough from the leveling of wages, now via outsourcing and use of immigrant labor, and now the capitalists found a new tool - debt.

They loaned money to their own workers! It was like the old days when you lived in a company town, bought at the company store and ate at the company diner, all deducted from your check. Not only will we pay you a crap wage, we will snag every dollar you spend on food, rent and shopping too.

These same capitalists were now swimming in ultraprofits with the money they were making off loaning money to workers and home mortgages (just another type of loan). They had so much money they did not know what to do with it. They threw it into the stock market, and the market for high-end goods of all sorts went through the roof.

Conspicuous consumption came back with a vengeance, and the scummy media once again sang and danced the praises of the most idiotic and obscene ways the rich chose to blow their unneeded and often unearned cash.

A whole new financial industry, a parasitic industry on the economic body of the nation, sprung up, an industry that created no products and no real wealth. It was nothing but a gigantic casino on Wall Street.

All sorts of funky instruments that no one understood were dreamed up - derivatives, CDO's, mortgage securities and all sorts of other stuff that probably shouldn't even be legal. Almost no one understood these things and no one seemed to understand what they were worth.

The inevitable bubble came and the party crashed, as it always does when capitalist bubbles go bust.

The root causes were the destruction of the regulations put in in the 1930's, during the Depression, in order to prevent another Depression. As soon as these regulations were put in, the capitalists began plotting and working to get rid of them.

Over the next 80 years, the capitalists created a Gramscian cultural hegemony that attacked socialism, government and regulation and exalted free market capitalism. Socialism, government and regulation were described as possibly good ideas, but doomed to failure. The only way to avoid the inevitable failures of socialism, government and regulation was to completely deregulate the economy. Anything less was the road to ruin.

With their money, the capitalist interests bought up all the media and most of the politicians. They used this to get rid of the Depression-era regulations and create the manipulate US culture to where your average worker thought that was a great idea, if he understood it at all.

There are various proposals for how to deal with this economic mess. As discussed in a previous post, conservatives, reeling and increasingly discredited, have tried to blame the catastrophe on too much regulation, not too little. Even the slimy media that normally goes along with this crap is finding this too much to buy.

White racists are promoting the racist notion that liberals (via affirmative action and anti-discrimination laws), niggers* and beaners* are the ones that destroyed the US economy. The Republican Party has to some extent bought into this, as has the business press, their amen corner in the mass media, and their academic hacks, but the argument is too slimy and racist for most decent people, plus there isn't an ounce of truth to it.

Steve Sailer, an excellent writer who is widely read, is the latest to promote this racist travesty, much to his shame. Sailer is looking more and more like a Republican Party hack than a really deep-thinking, independent and empirical author.

Furthermore, Sailer has been skating on the edges of racism for some time now without really going over. More often, he seemed to be giving the racists lots of nice talking points. Now he's finally pushing an explicitly racist discourse, and it's not even true. Too bad.

Rate of subprime mortgage defaults by race:

Whites       19%
Blacks       19%
Hispanics    19% 

End of discussion!

Liberals, Leftists and social democrats have proposed re-regulation, but the problem here is that we are probably going to re-do the 1930's experience all over again. We will put in a bunch of great regulations and as soon as we put them in, the capitalists and their mass media machines will start plotting to get rid of them.

Then the capitalists and their media machines will launch a jihad, for as many decades as it takes, to reverse all these regulations and get back to total deregulation again. In time, workers will forget why they put the regulations in in the first place, and they will go along with it.

The capitalists will buy most of the politicians all over again, and the politicians will vote to deregulate again. The capitalists will work to recreate their Gramscian cultural hegemony, and the average worker will once again think deregulation is the smart thing to do. The economy will blow up again and we will be right back to 1929 and 2008.

Wolff suggests that there is a third alternative. He describes a paper done by a colleague that describes Silicon Valley workers who hated their jobs. They had to dress up, sit in a cubicle and take orders and crap all day from a bunch of assholes. Can they pay anyone enough to put up with that? With the destruction of the Silicon Valley workforce, these workers were laid off.

A number of them got together and formed IT worker-run cooperatives, a non-capitalist form of ownership along the lines of anarcho-syndicalism. The study found that these workers said that they had never been happier. They were manufacturing software, selling it to buyers and dividing up the profits among themselves. The workers themselves were the new owners.

Wolff said that as a condition of the bailouts to the financial industry, we should mandate that they staff their board of directors with workers, not management, as a first step towards workers democracy.

Wolff also said that he had been giving speeches like this for 25 years now and he has had more interest in the past five weeks than in the previous 25 years.

That's ending on a hopeful note for now. Enjoy the video.

*Used sardonically

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A Primer on Mark to Market

The latest death toll figures from Hurricane Katrina can be seen on this website here. The famous Russian neo-Nazi video is on this blog here.

Updated October 24:

Some conservatives, of course, are blaming the current economic chaos on too much regulation instead of the obvious cause of it that any moron can figure out, lack of regulation. This is especially popular on White Nationalist websites, where the line is that all regulation of business is evil for White people.

I would like to point that although the conservatives are reeling from this latest economic meltdown and their philosophy is in tatters (rejected by the media elite who used to support them to the hilt more than anyone else), some conservatives are starting to fight back.

The market meltdown was not caused by the lack of regulation that everyone knows caused it; instead, it was caused by the conservative bogeyman of too much regulation. But this is not going over very well. Outside of the Fanatics' Bullpen and the Republican Party, no one is buying. Even the US rightwing media is not so stupid as to buy into this one.

The "mark to market rule"* controversy is an interesting one.

But nevertheless, mark to market is being put forward as one of the stupider regulations that supposedly either helped bring this mess on or is making it worse. So says Paul Craig Roberts (unapologetic Reaganite incredibly featured on Counterpunch) here, here and here, and Fareed Zakaria, Newsweek columnist and apologist for neoliberal globalism and US imperialism disguised as reasonable and thoughtful analyst.

Mark to market was put in to keep these corporate rats from lying about their assets and their bottom lines. Amid the catastrophes caused by the rampant accounting fraud and crime accompanying Enron and the other messes, the mark to market rule was instituted. What it means is simple: corporations have to list assets and debts as they really are, not as they think they are in their fairy tale fantasies.

What corporations were doing was this: Suppose I have assets that are worth $10X. That looks pretty bad for my bottom line, so I "re-evaluate them" with the help of some friendly local accountant firm criminals, and now automagically they are actually worth $100X. Why?

Because my accountant criminal buddies and I decided that my assets are actually undervalued, and are worth much more than the market says they are worth. So I get to fool investors, inflate my bottom line and pretend that my insolvent company is actually rolling in it.

Seems like an obvious abuse, no? Seems like a reasonable regulation, no?

Turns out after all that mark to market is sheer government evil. Evil big government is forcing angelic corporations to tell the truth about their net worth instead of lying as they always do, even in their sleep, and this harming the glorified US economy.

Nowadays, banksters and other financial criminals are holding all sorts of assets that are said to be worth, say, $100X. In truth, no one even knows what they are worth, and there is no way to figure it out. Their true value is so low that the banksters act like these assets are toxic waste.

Mark to market means they have to mark them at $30X or $2X or whatever the market says this crap is worth. But what they really want to do is lie and pretend that it's worth $100X.

Why? Because if the corporations tell the truth about how much their assets are really worth, instead of how much they lie and inflate their worth at, investors will pound their two-bit penny stocks into the ground where they deserve to be pounded.

But that's bad for the economy. We can't afford to have the stocks of insolvent companies pounded into the dirt on the basis of honest accounting of assets and debits. Instead, it is necessary to lie, paint a turd to look like a Michelangelo, and keep the sucker/investors marching in the door and laying out the cash. To tell the truth will wreck the economy. To save the economy, we must legalize lying once again.

Does any of this make sense in any rational world? Of course not.

These are the rarefied debates that occupy our ruling elites in these trying times.

*I am not an economist, and I may not have correctly characterized the mark to market rule or the arguments for or against it. If you think I have this wrong, head to the comments or email and let me know.

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Hurricane Neoliberal Wrecks Iceland

Iceland is about to go bankrupt. Moral to the story: the more a nation swallowed the neoliberal poison, the more fucked the are. The more sensible and socialist they were, the safer they are.

As I said before, if anything comes out of this world economic collapse we are presently experiencing, it is that neoliberalism should be buried for once and forever with a stake through its heart. That's not going to happen, but it should.

Since 1980, the entire world has been a swoon with something called neoliberalism. Started by Milton Friedman at the University of Chicago, it quickly become championed by both US political parties, almost the entire US corporate media - newspapers, magazines, TV and radio - and almost every single economics department at every US university. An entire generation of economists was graduated with a sole idea in his head.

Neoliberalism was tried for decades in Latin America. Or, actually, it was forced down their throats at gunpoint. It failed in Latin America as it failed everywhere. Death rates went up, life expectancy went down, infant mortality went up, access to medical care went down, wages went down, unemployment went up, schooling figures declined.

There was economic growth, but almost everywhere on Earth, it went only to the top 20% and the bottom 80% generally lost money. Same thing here in the US. Same thing everywhere, really. Neoliberalism is quite predictable in its effects.

For over a decade now, I have been reading increasingly shrill and paranoid screechings in The Nation, Counterpunch and other sane places that the march to neoliberalism could lead to economic catastrophes, recessions, depressions, market crashes.

The folks saying this are called Leftists. In the modern Zeitgeist, Leftists are insane people, losers promoting a failed ideology, persons to be mocked who lack a single coherent idea.

Who tells the truth? Why, the entire politico-media world blaring FREE MARKET in my head day and night. I, the cynic, wondered dubiously if this Chicken Little stuff would come true.

Sadly, the Leftists, intellectual losers on the wrong side of history, were right all along. They predicted this whole damn mess. As I said, neoliberalism is predictable. The entire media-political intellectual class, the entirety of US thinking, wisdom and expertise, was wrong, wrong, wrong, a million times wrong.

Shitheads.

Now the shitstorm is slamming into their faces, and yours and mine, with hurricane gale force.

Iceland, otherwise sensible Nordics, become the worst neoliberal crackheads in Europe. No one deregulated their financial sector like the Icelandics. They were Milton's test-tube baby. They're now his Frankenstein.

The same way Friedmanites blew up Chile and raped Russia, leaving her beaten and bloodied, they have left a scorched Earth in frozen Iceland. The most free market in Europe has been wrecked worst of all.

Other states in Europe, accustomed to heavy state intervention in economic affairs, are probably going to ride this out a lot easier. Their financial sectors were already pretty well-regulated, and they are nationalizing like mad.

Interestingly, in Africa, the financial sector is still heavily under state control and there has been almost no financial deregulation. Africa, along with Cuba and some other places, is expected to be able to ride out this crisis quite well.

I never thought in my lifetime I would see socialism vindicated like this. Here in America, we nationalized Fannie Mae and Freddie Mac and the world's largest insurance company. Now we are on our way to nationalizing the banks.

Would ever thought that George Bush was a secret Marxist-Leninist?

Niggers* and Beaners* Wrecked the Economy Redux

White nationalists have advanced the extremely racist argument that Blacks and Hispanics are responsible for blowing up the economy with the latest subprime mortgage meltdown, which has taken out titans in the insurance and brokerage industry. Lehman Brothers, the 3rd largest brokerage firm on Earth, was allowed to implode.

AIG, one of the world's largest insurance companies, was about to go bankrupt until socialism stepped in, as the Bush Administration bought an 80% stake in the firm. I do support nationalizing huge industrial titans like this that have proven too irresponsible to run a modern company.

AIG went down because they insured the subprime securities that investors bought against going bad. Yes, you can buy insurance on your stocks, bonds, derivatives and other financial crap. Amazing, huh?

It remains to be seen whether an $85 billion bailout of AIG is a good bargain for taxpayers. It seems that we are investing public money in this mountain of AIG's losses, no? How is the public supposed to benefit from this?

AIG investors are now scrambling around trying to figure out a way to pay back that debt in order to ward off a government socialist buyout of 80% of the stock. I do not think that they can do it. AIG is, in my opinion, insolvent. Nor do I think they will have much luck borrowing money from anyone else. Would you loan these losers any money? Get real.

Meanwhile, even after the bailout, AIG's stock is still being pounded into the dirt. I guess that bailout didn't make anyone happier about AIG stock. Everyone exposed to AIG stock in the form of pensions and other funds is scrambling to get out from under the avalanche. Pension funds are suing AIG for wiping out their holdings.

Do you own an AIG insurance policy? That's not worth much, if you ask me. States are now "reassuring" policyholders. I'd be canceling that toxic policy in a New York minute.

As I mentioned in my previous post, I do not agree with the White Nationalist racist argument that niggers* and beaners* blew up the economy.

They apparently got this argument for articles like this Village Voice piece. However, if you read the piece carefully, it does not support the WN argument at all.

Under the cover of anti-racism, Andrew Cuomo and the rest of the Clinton criminals gave the industry what it wanted - loosened regulations on whom they could loan to. "It is also worth remembering that the motive for this bipartisan ownership expansion probably had more to do with the legion of lobbyists working for lenders, brokers, and Wall Street than an effort to walk in MLK's footsteps", as the article notes.

Note that the Bush Republicans did not overturn a single one of Cuomo's "anti-racist" loosening of standards. Furthermore, as I read the article, there was no federal "mandate to loan to more Black and Brown poor people."

This argument makes it seem like Evil Big Government liberals forced prudent bankers to make loans to non-White deadbeats that they knew would go bad, loans that they themselves did not want to make. This is not the case.

The debt was already being sold and resold all over the place, and, as the article notes, even if the borrower defaulted, that was no big deal either, as they would just resell the home. Lots of money to be made all around on every step of the chain, even if the borrower defaults.

The latest insanity, where Joe Public gets to bail out a bunch of gambler criminals, is truly horrible. Basically, you and me will be forced to buy up all this bad debt from a bunch of white collar crooks, debt that is nearly worthless. For this worthless debt, we will fork over $1 trillion for a pile of stinking garbage.

Further, the crooks are absolved of all of their losses at the Mortgage Casino and free to go gamble away again. This means we are setting ourselves for this situation to recur over and over, and as long as the public bails out all losses and guarantees all gains, there is zero motivation to be prudent. Wow, isn't neoliberal capitalism a great system!

Incredibly, both parties, from the most liberal of Democrats to the most conservative of Republicans, got in on this bullshit. A particularly horrible feature of the plan that the "liberals" went along with is that there are to be no new regulations whatsoever on the financial industry. Gotta love those liberal Dems!

In this way, corporate criminals get to make all of the money they can with this sort of gambling, but then when they start losing money, you and me have to bail them out. What a bunch of fucking shit!

That's like giving me a credit card to go to the casino and I get to keep all of my winnings and any time I lose money, you all get to pay me back so I can go to the casino tomorrow. I like that deal! Let's set it up now!

*Used sardonically

Niggers* and Beaners* Wrecked the Economy and Other BS

It's not just White nationalists who are making this racist argument. The business class has also taken it up. Turns out Bill Clinton blew up the economy by forcing fine upstanding loan sharks to loan to stupid, low IQ, morally depraved, irresponsible Blacks and Hispanics.

I do not agree with this argument, "Blacks and Browns ruined our economy" one bit. For one thing, there is not the tiniest bit of evidence that this is true. Social scientists and journalists, liberal or not, often tell the truth. If Blacks and Hispanics ruined our economy, that's unpleasant to hear to most liberals, but it's going to come out sooner or later, because a lot liberals (like me) would write about it whether it's PC or not.

First of all, the "pressure to loan to Blacks and Browns" thing came in under Clinton around 1992 or so. There was a problem, because entire Black and Brown neighborhoods were redlined as bad credit risk. There were all sorts of creditworthy folks living there, but they could not get a loan because of where they lived.

This was back in the American Middle Ages, 15 years ago, when lenders actually cared whether or not you could repay a loan.

The economy blew up due to subprimes in 2008. There is a horrible time lag there that just does not make sense.

This argument portrays lenders as the good guys who were forced to loan to scummy non-White ghetto types who never intended to pay back their loans.

First of all, the banks were never really involved in any of this from what I can tell. One of the drivers of this whole crazy mess was the farming out of home loans to home loan institutions like Countrywide which were basically run by criminals. The banks washed their hands of the debt because it wasn't getting paid back to them anyway.

The Countrywide folks deliberately made bad debts to noncreditworthy folks because the debt wasn't going to be paid back to them either. Why? They were going to package it and fraudulently sell it to a bunch of sucker victims. Criminal accounting agencies gave the crap mortgage securities AAA ratings so they sold better.

Suckers all over bought the stuff, including I guess a bunch of banks?! Surely, brokerages went up to their necks in buying crap mortgage securities. Then insurance companies like AIG insured the buyers of this crap debt in case it went bad. The whole fraudulent mess blew up, as anyone with any sense knew it would. But when to scammers and fraudsters ever care about the damage they do?

This argument attempts to portray the Countrywide criminals as fine upstanding citizens, forced by Evil Big Government into making loans to deadbeat niggers* and beaners* who anyone knew would never pay back the loans.

That's not true. These guys were deliberately making shit loans because they make like ~$5,000 commission on each one. They sold the debt so they didn't give a damn if it went bad. The more loans the better. Standards were lowered and subprime bullshit was invented to get noncreditworthy folks in the door and put their John Hancock on the loan they could never pay back.

Suckers were fooled about their real ability to pay back the loans - they were told that they would be able to pay back the loans easily, and they fell for it. Hey, scammers and fraudsters are good. They fool all sorts of people, even smart people, all the time. It's not the victim's fault when he's taken by a sociopathic con artist.

Furthermore, it is not up to me to decide whether or not I can pay back a loan.

Me? I'm basically insolvent.

I'd love to have a loan for $20,000, $50K, $100K or however much your fool ass is willing to loan to me.

Of course I can't pay it back.

My credit rating will get wrecked, but if I need the cash, I won't care, and anyway, you will be left holding the bag, and out for $100K or whatever. It's up to you, the lender, to decide if I am a good credit risk or not. One look at my bottom line should send any lender into paroxysms of laughter.

Anyone who makes an extravagant loan to me is an idiot, deserves what they get, and odds are they are going to lose big. Lending institutions used to be sane. Borrowers were examined with a fine tooth comb and run through the gauntlet. Few loans went bad.

When the loan isn't coming back to you anyway, there's zero motive to care about repayability.

That's a recipe for disaster.

Here a smart commenter, turkey, offers a modified theory that offers bits of both theories and seems to make sense. Clintonite neoliberal hucksters used anti-racism as a ruse to allow (Not force, since they wanted to do it anyway!) lenders to lower standards. They tossed in the clincher of Fannie Mae and Freddie Mac backing of the crap loans.

This was an era in which both Republicans and Democrats were in on the increasing privatization of Fannie Mae and Freddie Mac. Some Clintonite Dem criminals like Franklin Raines made millions off this fraud. Republicans were basically along for the ride. Black and Brown proles were used as suckers and conned into credit-wrecking loans that they could not pay back so huckster-criminals could make a fast buck.

RL: "There appears to be little evidence to back this up. For many years, banks had different standards for Whites versus non-Whites and many Blacks found it almost impossible to get a home loan no matter how good their credit was."

turkey: Actually, the VDare top guy (Brimelow) pointed out in a '93 Forbes article that the default rate in the early '90s was the same for blacks and whites, i.e. the mortgage lenders were using correct terms and the market was sane. If blacks were held to unreasonably high standards they'd have had lower default rates than whites.

Instead during the '90s the neoliberal Democrats used race crusading as a ruse to let lenders make quick money off marginal loans often implicitly backed by the government (which they were all champing at the bit to do - this does not excuse them), while seeming to stay on the side of the angels, and Republicans saw the angle and got down in the trough, too.

The default rate differential between whites and black ballooned under the irrational regime. I'm not familiar with the "Hispanic" analogs but there's been so much immigration that it's probably hard to follow.

There's actually a PDF on the net of a response from Fannie Mae propagandists in the early '90s trying to get Brimelow to shut up about their gravy train that you can download. The bullshitting is obvious in hindsight.

So the higher quality of white nationalists are laying some blame on the exploitation of the religion of anti-racism, not on lumpen whites and blacks and mestizos and Amerinds themselves, who shouldn't be blamed for trusting a smiling fixer that said they could have a nice house.

*Used sardonically