Civil rights advocates tried to use the government to ensure equality of outcomes for everyone in the housing market. Now we all must pay.
By Steven Malanga
In the early 1990s I attended a conference designed to teachjournalists the tools of an emerging field known as computer-assistedinvestigative reporting. One of the hottest sessions of the conferenceexplained how journalists could replicate stories that other papers haddone locally using computer tools, including one especially popularproject to determine if banks in your community were discriminatingagainst minority borrowers in making mortgages. One newspaper, the Atlanta Journal-Constitution, had already won a Pulitzer Prize for its computer-assisted series on the subject, and others, including the Washington Post and the Detroit Free Press,had also weighed in with their own analysis based on government loandata. Everyone sounded keen to learn if their local banks were guilty,too.
In order to push banks to lend moreto minority borrowers, advocates like the Boston Fed put forward anentire new set of lending standards and explained to the industry justwhy loans based on these slacker standards were somehow safer than theindustry previously thought. These justifications became the basis fora whole new set of values (or lack of values), as no-down payment loansand loans to people with poor credit history or to those who werealready loaded up with debt became more common throughout the entireindustry.