Will people hold minorities responsible for the mortgage crisis?

Despite this seeming like a silly question, many are already starting to blame minorities for the mortgage crisis.

Back in 1992, according to the Federal Reserve Board, “blacks were twice as likely as whites to be denied mortgages” [1] Outraged by these findings, the government and organizations such as ACORN (association of community organizations for low-income people) pushed for severe reform in bank lending practices. In 1994, Fannie Mae pledged $1 trillion to finance 10 million homes for low-income people. As a result, low income people (greatly made up of minorities) across the nation were getting subprime loans that seemed affordable. Despite terrible credit, with no shot of paying back banks, minorities and other low income people still were given mortgage loans.

Despite the activism on the side of minorities to gain these loans, is it really fair to blame them for the subprime crisis? Although some firms were forced to make loans to low income people, they were the ones who continued this cycle and pushed up the prices of the housing markets to make colossal profits. Moreover, it was these same capitalists that enticed these low income people into taking subprime loans in the hope that they would default and that the bank would make lots of money on gaining the default house in an over-inflated market.

Furthermore, lending to poor people is not necessarily risky. Nehemiah Homes proves this. Nehemiah Homes is an initiative that sells homes to poor people on the outer boroughs of New York. Despite selling homes to poor people, the program has a default rate of 0.25% (10 defaulted homes out of 3,900). So why is a project like this on a grand scale so risky? This can easily be explained by the greed on Wall Street. Selling loans in hope that they will fail never really left the majority of minority low-income home buyers a chance of not defaulting. Minorities were subject to a system designed for them to fail, and now that the system itself failed, there is a misplaced blame on the original victims of the crisis: the minorities and low-income people.

Even misplaced blame can carry into policymaking. Thus, leaves the question: will people carry an anti-minority sentiment because of this crisis? Will racist lending practices return in the future? How will Obama reshape this industry and how will it affect minority lending?
All these question remain unanswered and it will not be until Obama has sat in the Oval office for years, will we truly know the answer.

For further reading:
[1] http://www.thetrumpet.com/index.php?q=5702.0.110.0
[2] http://www.newsweek.com/id/162789